Earlier this month, the IRS released Notice 2021-49 and Revenue Procedure 2021-33, to provide additional guidance for employers claiming the Employee Retention Credit (ERC) in 2020 or 2021. This guidance provided answers to several unresolved issues including: (more…)
California Enacts a Pass-Through Entity Tax
Good News for Business Owners – California Assembly Bill 150
By Rob Trammell, Principal
For those of us living in California, or other high tax states, there was a nasty section of the Tax Cuts and Jobs Act (TCJA) that has been causing some pain since 2018. That was the $10,000 limitation on the amount of state and local taxes that could be deducted for federal purposes. Even though your state income and property taxes could well exceed that amount, the maximum deduction on your federal return was limited to $10,000. (more…)
Overseas Expansion - Tax Questions Can Complicate Your Growth Plans
When a domestic company begins operations in another country, its tax picture grows dramatically more complicated. If an international expansion is part of your company’s growth strategy, your financial management and tax teams will need to make a number of critical tax-related decisions in addition to the many strategic, competitive, and financial considerations your company already must address.
Here are seven important tax-related variables that will affect when, where, how, and even whether you launch overseas operations. While these are by no means the only issues you must consider, your answers to these questions will drive much of your future decision-making. (more…)
COVID-19 Recovery - Time to Take Another Look at the Employee Retention Credit
After a series of rule changes and expansions to various COVID-19 relief programs, many companies are reconsidering certain federal benefits they had previously ruled out. The employee retention credit (ERC) is a prime example.
The initial intent of the ERC was to make it easier for a business to keep employees on the payroll if it was forced to close or partially suspend operations due to a mandatory government shutdown order or if it experienced significant revenue loss during the pandemic. While the basic structure and purpose of the program remain unchanged, both the eligibility criteria and the size of the potential benefits have changed significantly. (more…)
California’s Mandatory Retirement Plan Impacts More Employers in 2022
By Abe Livchitz, CPA, Senior Tax Manager
August 26, 2022 Update to Expand CalSavers to More Workers
Governor Newsom signed an amendment, S 1126, requiring all employers within the state of California with at least one worker to participate in the CalSavers program (reducing the minimum from five workers). The amendment is expected to take effect prior to December 31, 2025, and continues to apply to employers that do not otherwise offer a retirement plan to their employees.
May 9, 2022 Update
Action Is Required
The state-run CalSavers program was enacted in 2016 to provide employees an opportunity to build retirement savings and let employers avoid administrative fees and fiduciary responsibilities. An email outreach program launched towards the end of 2020, so many businesses have already received a notification to register for the CalSavers retirement plan program. In 2021, this requirement only applied to California employers with more than 50 employees, but effective in 2022, employers with more than 5 employees will be required to register.
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Employee Retention Credit Now Offers Big Benefits to Employers
The Employee Retention Credit was enacted in March 2020 as part of the CARES Act. It was enhanced and expanded when business relief legislation passed in December 2020 making it a more valuable option to generate cash flow. The amount of the credit was significantly increased, employers are now allowed to claim the credit until June 30, 2021, and the restriction that prevented employers with PPP loans from claiming this credit was repealed retroactively to March 2020. This repeal offers a significant opportunity for PPP loan borrowers to now benefit from this credit.
For employers eligible in 2020, the credit can be claimed on amended payroll tax returns and offset the employer portion of Social Security tax, but any excess credit is fully refundable. For 2021, employers can reduce their current federal payroll tax deposits and even request an advanced refund from the IRS. (more…)
Year-End Tax Planning Ideas for Individuals and Business Entities
As this very unusual year comes to a close, we can look forward to the prospects and challenges waiting for us next year. Until then, there are many tax planning opportunities available to individuals and business entities that can be implemented before December 31, 2020.
Congress is currently working on another stimulus package with provisions that will provide assistance to business entities and no significant tax changes for individuals. It is uncertain if this legislation will be enacted before the end of the year. Watch our website for further details.
Please contact us to discuss any of the ideas discussed below. (more…)
2020 Tax Preparation - Prepare for an Unprecedented Tax Season
With the end of 2020 approaching, it is time to prepare for what promises to be an unprecedented tax season. Here are some of the key issues that business owners, financial officers, and tax executives should consider now.
Note: This is by no means a complete list, and the tax consequences of some pandemic relief programs might change. (more…)
New Tax Credit Available For California Employers Hiring or Rehiring During Pandemic
Action Required On December 1, 2020
In September 2020, California enacted Senate Bill 1447, the Small Business Hiring Tax Credit (SBHTC) to provide financial relief to qualified businesses and encourage hiring and retaining employees. The tax credit is $1,000 per increase in full-time equivalent (FTE) employee up to a maximum credit of $100,000 per employer. Unlike most tax credits, this credit can benefit unprofitable businesses that do not have an income tax liability as the credit can also be applied to offset the payment of sales and use tax deposits. The credit will be administered by the California Department of Tax and Fee Administration (CDTFA) which is requiring employers to reserve an allocation of the credit beginning December 1, 2020. (more…)