It’s been a long and unprecedented year. COVID-19 has affected the way everyone does business as well as how businesses should plan ahead for tax season. In addition to filing according to your entity type, paying employer tax and meeting the deadline for filing, here are four considerations that COVID-19 may or may not have added to your business taxes.

1. Paycheck Protection Program (PPP) Loans

You do not have to pay federal taxes on your PPP loans. They do not qualify as income. If you are interested in loan forgiveness there are two rules to adhere to:

at least 60% of the loan must be used for payroll, and
at most40% of the loan is used on qualified expenses (e.g., personal protection equipment (PPE) and rent).

The tax implications for PPP loans vary by state and qualified expenses are determined by the government. Read over your loan agreement carefully to make sure you’re within the guidelines and if you have any questions, speak to a tax professional. 

2. Payroll Tax Deferment

For employers who opted to not pay Social Security tax between March 27, 2020 and December 31, 2020, repayment starts at the end of the year and the deferment has to be noted on your taxes. The first half of the deferred repayment amount is due by December 31, 2021 and the second half is due by December 31, 2022. Businesses have the option to spread out repayments throughout the year if they chose. A tax professional can assist you with the right paperwork.

3. Families First Coronavirus Response Act (FFCRA)

Companies who offered leave to workers during the pandemic are eligible to receive tax credits for the full cost of sick and family leave and qualified healthcare plan expenses.

4. Other Considerations

This year C-Corporations are able to claim 15% more of their cash donations in 2020–from 10% to 25% of cash contributions. There is also Employee Retention Credits (ERC) or Employee Retention Tax Credits (ERTC) to consider as well as the Economic Injury Disaster Loan (EIDL). Any grants or money received in 2020 under this program is not considered taxable income. Regulations may vary by state. 

While deadlines and the paperwork as a whole has not changed this year, the most important part of filing your business taxes is staying focused and organized. The IRS allows businesses three years to file their taxes. While delaying your filing process may not be beneficial, making sure they are filed correctly is crucial for successfully getting through this hard time. Speak to an account/tax professional to make sure all of your business’ financial needs are addressed and you are able to benefit from all of the benefits offered during this particularly complicated tax season.