It's Official
IRS delays the Personal Tax filing deadline until May 17th
red and yellow tag deadline extended
All CPA's (and some taxpayers) took a collective sigh of relief yesterday when it became official that the IRS has pushed the deadline for 2020 personal tax returns from April 15th until May 17th. Colorado announced this morning they will follow suit and has extended their due date to May 17th as well.

One important qualifier - if you make estimated tax payments, your first estimate toward your 2021 liability is still due on April 15th.
in response to the coronavirus impact on the economy the government is contemplating a stimulus package or bailout for companies in financial crisis
Highlights of Latest Stimulus Package

The third stimulus bill, called American Recovery Plan (ARP) was signed into law on March 11th. Although there are still some details to be worked out, here are what we think are the most pertinent highlights to our business and personal clients along with some related updates

PPP
  • ARP added another $7.3B to the PPP2 funding bucket.
  • So far, 2.7M PPP2 loans have been approved for $181B. With the added $7.3B, there is still over $97B of funding available for qualified applicants.
  • Although the Senate still needs to ratify, the House passed an amendment to extend the deadline for PPP2 applications to May 31st (from March 31st)
  • ARP has modified the PPP eligibility and loan calculation logic for Schedule C filers in a favorable way. It will now use Gross Income (sales) to determine the loan amount instead an Net Income it used before. This change will increase how much Schedule C filers can get approved for.
  • Regarding forgiveness, the SBA continues to indicate they are putting priority on PPP2 processing, not forgiveness of PPP1. PPP1 ended with 5.2M loans worth $521B - of those only 33% have been officially forgiven...

Stimulus Payments
  • ARP includes an additional $1,400 direct stimulus payment for eligible individuals.
  • Whereas the first 2 stimulus payments excluded dependents under 17, the third payment includes all dependents regardless of age.
  • Although the income eligibility levels are the same ($75,000 for individual, $150,000 for joint filers), eligibility phase out is much quicker ($80,00 and $160,000, respectively).
  • If you have already filed your 2020 personal return, the IRS will use that income for eligibility determination for the 3rd stimulus payment. If you have not filed yet, they will continue to use 2019 or 2018 returns as applicable.
  • If you have not filed and anticipate your 2020 income will be lower and increase the amount of your 3rd stimulus you are eligible for, don't worry. The IRS will automatically send adjusted stimulus payments to these taxpayers later in the year.

Restaurant Revitalization Fund
  • Although specific to certain industries (bars, restaurants, food trucks, etc), this is a hidden gem in ARP that can be of great help to these businesses.
  • The good news is that it is a GRANT and is calculated at 100% of your revenue loss from 2019 to 2020 less any PPP loans you have received. The funds have to be used on eligible expenses (essentially most ordinary business expenses). Also, it appears to be retroactive as the covered period will be February 15th, 2020 through December 31st, 2021.
  • The bad news is that this program is NOT open for funding yet at there are many logistics to work out (including the application process).

EIDL (Economic Injury Disaster Loans)
  • Although the EIDL grants ($1,000 per employee up to maximum of $10,000) have been discontinued, there are additional funds available for traditional EIDL loans. These are NOT forgivable but have great terms.
  • They are considering further deferrals of EIDL loan payments but nothing official yet.

Other Elements
  • Unemployment - ARP makes the first $10,200 of unemployment non-taxable if your AGI is <$150,000. This benefit IS retroactive to 2020 and the IRS is discussing how to handle those that may have filed before this became law an indicated an amendment may not be needed. They may automatically calculate the impact and send the money back. ARP also extends the $300 weekly federal unemployment supplement through September 6th.
  • Employee Retention Tax Credit (ERTC) - We have highlighted ERTC in other newsletter and although few business have been able to take advantage of this as the IRS has many details to work out, ARP extends ERTC for the full year of 2021 (as opposed to ending at the end of June, 2021). You should expect us to reach out after the tax season once details are finalized on ERTC and we identify business clients it will benefit.
  • Child Tax Credit (CTC) - ARP increases the CTC from the current $2,000 per child under 17 to $3,600 for children under 6 and $3,000 for children ages 6-17. This change is NOT retroactive to 2020.
  • Child/Dependent Care Credit - ARP increases the potential credit for eligible dependent care expense from $2,000 per dependent (maximum of $4,000) to $4,000 per dependent (maximum of $8,000). The credit is still calculated at 20% of eligible expenses incurred and the change is also NOT retroactive to 2020
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Miscellaneous Colorado Items

Minimum Wage - the new minimum wage that became effective on Jan 1st is $12.32 ($9.30 for tipped individuals assuming with tips they still exceed $12.32)

Health Family and Workplaces Act (HFWA)
This is an important new law that went into effect on January 1st. Although businesses with less than 16 employees are exempt in 2021, all businesses regardless of employees will be required to comply in 2022. However, if you have an existing PTO policy that is at least as generous as this law, you are covered. The attached article courtesy of the Denver Post (click on Read More) goes into more details but here is an excerpt from the article.

"Effective Jan. 1, the new law will require every Colorado employer to offer up to 48 hours of paid sick leave to their workers — that’s six eight-hour days off — who will accrue this benefit at a rate of one hour of paid sick leave for every 30 hours on the job. Someone who works 40 hours per week will earn the full 48 hours after 36 weeks. Workers will be able to begin taking paid leave as it’s accrued, meaning someone who works eight-hour days will have to put in six 40-hour weeks before being allowed to take one paid sick day."