In this time of thanks, I understand how many are having a difficult time finding that feeling.
In this time when we are supposed to be gathering with family and loved ones, many of us only have a virtual connection to them.
In this time of year that is supposed to bring holiday cheer, many are wondering how they will pay their bills through the end of the year.
In this time when so much feels in constant flux, I know that I do not hold the power to set anything right with these words.
But know still that this is a general wish for your wellbeing and success. Know that there is someone out there wishing you well and hoping things turns around for you.
For we are starting to see some lights at the end of this tunnel. Just as this point on the calendar feels nothing like it did last year, the same point next year also holds the promise of difference. In time, this will be a year we tell stories about, stories that may even define us, because of how much we went through and still came out the other side.
Until then, may your holiday season start with some peace. May you be able to find that feeling in whatever space (no matter how small) it lives, and may you be able to take a moment to take it in and gain the perspective that comes with calm.
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Things kind of feel like they are in a holding pattern right now. Joe Biden is president-elect, but not quite everyone is fully accepting that, and he won’t take power for another two months no matter what. Good news is rampant with treatments and vaccines for COVID-19, but cases are rising quickly at the same time. It is difficult to know just where the country stands on, well, anything.
I am certainly not here to pretend that I have any answers to these issues. What will happen in any political transition probably has as much to do with how the Senate runoffs go in Georgia than who works in the Oval Office and although that light at the end of the pandemic tunnel is shining brighter, it is still difficult to put a timeline on when we will reach it. That does not mean, however, that this can’t be a time of learning. And the biggest lesson we should learn is to not overreact.
In the political arena, vast importance (and probably rightfully so) was placed on the outcome of the presidential election. But should it really get all the importance? Even with Biden in power, Democratic control of the Senate is far from assured, making sweeping changes much more difficult to achieve. So yes, there were significant differences that had to be weighed between Trump and Biden, but it was still far from the only piece of the political puzzle.
In the pandemic arena, we have been on a push-and-pull cycle since March. The economy took a vast dip, has seen a good rate of recovery since, yet remains far from a complete comeback, and now things feel less stable than they have in months with rising infection numbers and renewed fears of possible lockdown measures.
That knife’s edge feels much sharper for some than others. Let’s not forget there are many who returned to work and now feel that sharp pang of fear that the current situation could push them out of work again. Let’s not forget that there are still substantial numbers of people who have been complete without work through these months.
It is tough to tell someone not to overreact when they live with such fear. But we do not make good choices when they are based in fear. Even when it feels like there are no good choices, we must make calculated decisions to make our present the best we can while taking what steps we can to help ensure the future.
It is a little easier to tell someone not to overreact when they are gambling on where these situations will take us, though. After all, when you take a nine-month view of where we have been this year, we can easily see times when our guesses as to what was coming were right, and we can even more easily see when our guesses were very, very wrong.
Definite answers have been more difficult to come by than ever this year. We must keep doing the best we can in the situation we are in. This does not mean simply throwing up our hands and taking the trip without any navigation, but it does mean making attempts to not be ruled by in-the-moment emotion and to accept that there are forces beyond us that make an ultimate answer impossible to determine.
So here is to wishing you comfort in these uncertain times.
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As we head toward the end of the year, there are a lot of questions out there about PPP loan forgiveness. Let’s go back to the beginning -
The Paycheck Protection Program (PPP) was part of the CARES Act that was passed to offer economic relief in the wake of shutdowns caused by the COVID-19 pandemic. The PPP program itself was seen to be a lifeline for businesses as it helped provide cash flow to those that saw a decrease in revenue, shut down of business operations, and other effects of the pandemic. It offered loans with funds that could be forgiven. To be forgiven, a portion of the money was to be used for payroll expenses, but beyond that it could be used for rents, utilities, and interest on pre-existing debt.
Of course, things got a little messy from there as the rules and logistics were worked out. The payroll-related requirements loosened, but then some benefits paid for employees were forgivable, with restrictions on owner pay. We also learned that rents paid to third parties are forgivable but not the same amounts if paid to owners or related LLCs except for mortgage interest. Then there was the decision that while PPP money that was forgiven is not taxable, expenses paid with those funds will not be deductible.
Currently, the SBA has opened the forgiveness application and some businesses should start to apply for that forgiveness. The question is who should apply now and who should wait?
If your tax picture will not change if your expenses paid with PPP funds became non-deductible, you may want to apply now. This could include sole proprietors (who file their taxes on a Schedule C) with no employees, nonprofit organizations, and C-corporations with operating loss carryforwards.
If you are a sole proprietor with no employees, your deduction for expenses will be largely unaffected by forgiveness. Owner draws are “payroll” for PPP purposes but are not a business deduction and the expense portion of the forgiveness calculation is probably small or nonexistent. As for nonprofits, they do not have any federal tax liability. C-Corps with operating losses have to make a calculation to ensure advantageous timing, but when correctly done, forgiveness won't affect the tax liability.
Waiting to File
If you are not in those three categories – including S-Corporations, Sole Proprietors with employees, Partnerships, and C-Corps with profit - you may want to wait until Congress acts on the deductibility of the PPP expenses so that you will have an opportunity to maximize those for both forgiveness and tax liability. You have many, many more months to apply for forgiveness, so the deadline is no reason to rush. You will want to speak with your tax preparer (not just your payroll company) to see what they recommend, as well.
If you need help deciding which group you belong to, please do not hesitate to contact us and let us know how we can help.
Well … it’s been a week.
And if there is one thing the past week has shown us, it is that there is often two sides to a story. For everyone thrilled that Joe Biden is now president-elect, there are almost as many people upset about the outcome. No one is necessarily wrong, there are just two possible answers. That is what voting essentially is, after all.
The same thing can often happen in the financial realm. On Monday, Pfizer released news that it had a vaccine against COVID-19 that was more than 90% effective. Great news, right? Of course, and if you look at the stock market’s overall numbers in the wake of the news, it agreed.
Well, unless you looked at some individual stocks, ones for companies like Zoom and Peloton. Heck, even giants like Amazon and Netflix saw a downtick because we may be seeing the light where we are not all at home all the time anymore.
This is something to remember as now move forward. What will Biden’s election mean for the country’s economy? What will it mean for tax policy?
Well, it is all guesswork now, but suffice to say there will be some change. And when that change happens, it is going to mean good things to some people, and it is going to mean bad things to other people. And heck, just what is going to happen may depend more on the two Senate runoff elections in Georgia than it has to do with Biden anyway.
The calendar timing means this all comes at the end of the year just as many people start to look toward their tax picture and finding what the numbers will say when it comes time to file next year. So, like I often counsel, we can only work under the rules that we currently have to the best of our ability. Even when those rules change, we will do what we can to help everyone work under the current rules and make them work in the possible way for their situation. And again, of course, that will be a good thing for some and a bad thing for others.
But everyone will get another chance to say how they feel about that, and everything else that happens, in four years. First off, may those years prove to be easier to travel than 2020. And next off, let us all remain committed to respect, civility, and lawfulness over that time. We have lived under rules and leaders we enjoy, and we have lived under rules and leaders we do not enjoy. We have thrived under both and we can continue to do so.
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With the way that 2020 has been hitting the world with disaster, I do not really want to talk about another one. In the wake of the pandemic, wildfires, and hurricanes, though, scams have popped up to try to take advantage of those most unfortunate situations. This then is a reminder to remain vigilant.
One thing to keep in mind to protect yourself is that most scams start with contact out of nowhere. For instance, there are many instances of individuals posing as representatives of fake charities. Now, when is the last time a charity you did not have a relationship with actually called you out of nowhere?
Of course, this isn’t an unheard-of occurrence, but it is rare. So, if you get a call soliciting money and you do not know how they got the means to contact you, it is a good idea to not immediately open your wallet.
This is not to say you shouldn’t donate, though. In fact, if you felt compelled by the pitch to give money – give it. Just spend some time online doing some research to find a reputable organization and to give it to. But when it comes to being online, also beware of suspicious email queries. Those often come with a link to a website, and these can sometimes be set up to look very legitimate, and even very like the sites of actual charities, but a peek in the web address bar can often tell you whether you are in a location you can feel safe about or not.
Scammers do not only pose as charities though, and another prevalent strategy they use is to present themselves as employees of an agency that sounds frightening. Posing as an IRS agent has long been used in this arena and recently there is a spate of calls out there of people claiming that your social security number is going to be canceled.
And of course, hearing such things can be frightening, because if they were true, they would not be easy to deal with and could have far-reaching negative consequences. Big problems, though, rarely come out of nowhere. I mean, many of us have had to deal with such difficult-to-handle issues, but we knew why, they were not complete surprises.
If you ever find yourself in a situation then that feels instantly overwhelming because of surprise, the best gift you can give yourself is time. If the communication is legitimate, it is not as if you are going to have five minutes to handle it. You can take the time to wrap your mind around the situation while ensuring it is legitimate. Only when you give quickly to something illegitimate will a result come about where it could be too late to fix.
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