Submitted
Editor’s note: The following was written by Peachin Schwartz & Weingardt (PSW). They are CPAs and advisors who deliver accounting, tax planning, consulting and assurance solutions. You can learn more about PSW at psw-cpa.com.
As we enter the last two months of 2020, we all realize that this has been a year like no other – from almost every perspective. It is imperative to take a look at your tax plan for 2020.
Many businesses have applied for and received the Payroll Protection Plan (PPP) during 2020. If you meet certain requirements on the use of these funds, the loan is forgiven and is non-taxable income to the business owner; however, those expenses paid with the PPP proceeds are currently NON-DEDUCTIBLE EXPENSES for tax purposes when the loan is forgiven. This will increase the business owner’s taxable income when the loan is formally forgiven.
The presidential election has many of our clients asking about changes in the tax law. One thing is for sure, taxes are at the lowest that we will see for the foreseeable future. Our national debt has tripled due to the pandemic. Should you accelerate income? Should you defer expenses? There is no set answer and decisions must be made on a case by case basis.
When it comes to income taxes, the best surprise is no surprise. Tax planning is even more important this year. We are here to help!