North Texas Dentistry Special Issue 2020 NTD SP ISSUE 2020 DE | Page 23

the forgivable amount is spent on payroll and the overall number of employees remains constant. Available funds are limited. SBA Debt Relief Program If you have a previous 7(a) SBA loan, or obtain a new 7(a) loan issued before September 27, 2020, the SBA will pay the principal and interest of current 7(a) loans for a period of six months. The SBA will also pay the principal and interest of the lender portion of 504 loans for a period of six months. The SBA will also pay the principal and interest of SBA microloans for a period of six months. You must contact your lender to request the six months of payments. Payroll Retention Credit For businesses that did not obtain a PPP loan, there is a credit of up to $5,000 per employee if certain conditions are met. In general, if your practice was forced to close during part of a calendar quarter or if revenue declines 50% versus the same quarter last year, wages paid during that quarter are eligible for a credit of 50% of wages paid. The maximum amount is $5,000 (50% of $10,000 wages) per employee. This credit can be claimed on Form 941 and Form 7200. Employer Social Security Deferral There is now an option to defer the 6.2% employer portion of social security and pay it in at a later date. 50% would be due by December 31, 2021 and 50% would be due by December 31, 2022. NOL Rules changed If you had a loss in 2018 that was previously required to be carried forward to 2019, you can now carry losses back to as far as 2013. If you had income and paid taxes in those previous years, this could result in receiving a partial refund of those prior year taxes. Qualified Improvement Property Rules Corrected Before, if you spent money to improve a previously existing commercial space in 2018, that was depreciated over 39 years. That has been corrected and now qualifies as 15-year depreciation and also for bonus and section 179 expensing, resulting in earlier deductions. You may be entitled to a refund by amending your 2018 tax return. IRA Distributions due to adverse financial consequences Another option to obtain funds is that you can take a distribution of $100,000 from an IRA or retirement account and you will not be charged the usual 10% early withdrawal penalty. You would then have two options: You can repay the IRA fund within 3 years and it will be treated as if it were a qualified tax-free 60-day rollover. Or, you can report the distribution as income either 100% in 2020, or 33.33% of the amount in 2020, 2021, and 2022. Tax Payments Deferred to July 15 In addition to the April 15 tax returns being moved to July 15, amounts due on the 2019 Individual tax return and Estimated Payments for the First Quarter of 2020 have also been moved to July 15, 2020. Disaster Relief Payments While not part of the CARES Act, IRS Code section 139 allows for businesses to reimburse employees for certain qualifying expenses (to reimburse or pay reasonable and necessary personal, family, living expenses) related to a declared disaster. This would be a deduction to the business and not reported as income to the employee. Main Street Lending Program The Federal Reserve created this four-year loan program for businesses with strong net income and relatively little debt. The minimum loan amount is $500,000 and the qualification calculations are more complicated than the other loan options. Participating banks and credit unions provide these loans and available funds are limited. As you can see, there are many potential areas of assistance in the CARES Act. You should review these against the fact pattern of your practice to determine which of these would benefit you the most. Jeramy is the founder of Jeramy Smith, CPA, PLLC. With more than 25 years as a Texas Certified Public Accountant, he has helped hundreds of clients with business strategies and tax-saving strategic planning. His boutique CPA firm focuses on serving Texas-based dental practices. This narrow market approach allows his team to offer indepth knowledge and reveal little known strategies tailored to specific situations to help practice owners manage their finances and grow their bottom line. Please call Jeramy at [phone] or send email to: [email protected] for more information. www.northtexasdentistry.com | NORTH TEXAS DENTISTRY 23