January is just around the corner and with it comes the beginning of a new annual information reporting cycle. For small businesses accustomed to using Form 1099-MISC to report nonemployee compensation, there are important changes that you should be aware of when reporting nonemployee compensation for the 2020 tax year.
Ever since the sweeping tax law changes brought about by the Tax Cuts & Jobs Act of 2017, high-tax states like Maryland have been scheming to circumvent the $10,000 cap on state tax deductions. After some trial and error, the U.S. Treasury and the IRS approved one of those schemes. Maryland is now allowing pass-through entities (PTE) to elect to subject themselves to an entity-level tax on behalf of Maryland resident members. The members that had Maryland tax paid on the PTE level will receive a corresponding state tax credit for the same amount. The benefit of this is that a PTE can deduct the tax paid on the PTE level, which will then flow to the member’s K-1. This is effective for any tax payments made after November 9, 2020.
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The Small Business Administration (SBA) released new required forms for Paycheck Protection Program (PPP) loan recipients with loans exceeding $2 million. These forms will help the SBA confirm “necessity” of loaned funds, of which the agency has already announced that PPP loans exceeding $2 million will be audited.
The story is a common one: the divorce settlement has been finalized. The couple parts ways, with both parties walking away with certain assets. Inevitably, only one of the parties has likely maintained a relationship with their financial advisor. Often, it’s been the husband who has managed the couple’s investment accounts alongside a financial advisor. He most likely will continue that relationship, while the wife, who is walking away with a nice settlement after the divorce proceedings, is left without a financial advisor. It’s important for that spouse to quickly find their own financial advisor who can help manage the money that was obtained through the settlement.
It’s been several months since the early days of the pandemic when many businesses closed their doors and sent their employees home to work remotely or await reopening. To survive, businesses had to find new and creative ways to adapt and overcome. However, even as the weeks have stretched to months, many business owners are still facing new pandemic related challenges every day. That’s why I, along with a few of my colleagues at Gross Mendelsohn, banded together to offer some of our biggest pieces of pandemic related advice for business owners as part of the firm’s new weekly video series, Advice From.
2020 has been a unique year to say the least. Many people who would otherwise commute to an office or jobsite every day are finding that they need to work from home because of the COVID-19 pandemic and social distancing restrictions. There may be tax benefits for individuals who find themselves setting up shop at home for an undetermined period of time. Here’s what you need to know to take advantage of those rules.