Month: December 2020

PPP#1 Loans

1. Covered Expenses paid with your PPP#1 Loan will now be tax deductible for money already received
2. PPP#1 funds will not be taxable income, which means the expenses paid with the PPP#1 funds will be tax deductible
3. The New Tax Bill, that President Trump signed on Sunday, December 27, 2020, repeals the requirement of deducting the EIDL advance from the PPP forgiveness amount
4. The EIDL advance up to $10,000 per Practice (or $1,000 per Employee), will not have to be repaid.
5. The New Tax Bill simplifies the forgiveness process on PPP loans of $150,000 or less. (We have yet to see what that new process or form will be). Please wait to apply for forgiveness, for the Banks are still waiting on updated guidance from the SBA and the US Treasury. Please remember, you MUST file for forgiveness, 10 Months after your 24 week period is up. If you do not file for forgiveness, your PPP Loan , will become a two (2) year Loan payable at 1% interest.

PPP#2 – Second Round of Funding

1. The SBA will have 10 days (after the New Tax Bill is enacted) to establish regulations for the next round of PPP#2 funding. Thus, please keep in mind that the highlights below are terms we anticipate being signed into law; however, the SBA’s regulations may alter this.
2. $284.5 Billion in funds will be available through the next PPP#2 loans.
3. Paycheck Protection Program (PPP#2) offered through March 31, 2021.
4. Is your Practice eligible for the second round of funding (PPP#2)? Businesses with less than 300 employees who have had a 25% or greater reduction in collections (i.e., gross receipts) in any ONE quarter of 2020, when compared to that same quarter of 2019. For example, let’s assume you collected $100,000 in April 2019, $1000,000 in May 2019 and $100,000 in June 2019 for a total of $300,000 for Q2 of 2019. We will need to compare that to the same quarter of 2020 (April, May & June 2020) to determine if you have a reduction of Collections that are 25% or better. I sense most of you will, since you were closed a good portion of Q2 2020. If so, we will then need further guidance from both the SBA and the US Treasury, as to what criteria will be needed to be satisfied to meet the new requirements of the PPP#2.
5. I will be working with the ADA in January 2021 as the PPP#2 develops and will be reporting back to you at that time. The ADA has been “off the charts” supporting Dentistry throughout this process. Your membership with the ADA is working for you!!  

Other Key Tax Provisions for Dentistry

1. Employee Retention Tax Credit: Extended through July 1, 2021; We are waiting on further guidance as to how this work in 2021.
2. COVID-Related Pay Tax Credits: Extended to March 31, 2021. These are the refundable payroll tax credits for Emergency Paid Leave and Emergency Family Medical Leave Pay that were set to expire on December 31. Please e mail Diane Nelson, CPA, MST at DNelson@schiffcpa.com for further guidance and help if needed.
3. Charitable Giving Incentive Extended: One-year extension of the $300 “above the line deduction,” meaning you can take this deduction even if you are not using itemizing your deductions on your individual income tax return. Is now $600 if Married Filing Joint (MFJ). Please see note below on giving to the ALS Clinic at Johns Hopkins Hospital in Baltimore, Maryland. Thank you!
4. Flexible Spending Arrangement (FSA) Relief: Allows individuals to carry over any unused health and dependent care FSA benefits from 2020 into 2021 plan year.

Department of Health & Human Services (HHS)

Many of you received Phase 2 funding from the Department of Health & Human Services. Some of you, even received funding from HHS recently within their Phase 3 funding. As of today, we will have to report to the Department of HHS in January 2021 and again in July 2021 as to how you used these proceeds and what monies were spent on such. As soon as January 2021 begins for Small Business, the Department of HHS will be supplying us with further guidance as to what documents will be needed in order to gain full forgiveness. As of now, please save all documentation (Invoices, Canceled Checks and Credit Card Receipts) for any items you purchased that would qualify for PPE Equipment & Supplies. We will be sending out an updated e-mail with instructions, as soon as the requirements become apparent to us.  

2020 4th Quarter Estimated Payments due , January 15, 2021

During the last Quarter of 2020, we have met with most of our clients. During your 2020 year end meeting, we presented to you, two (2) scenarios with respect to your Tax Position as of December 31, 2020. Please review such, and please pay the 2020 4^th Quarter Estimate based on the Column of your Tax Projection that states the PPP Loan will not be taxable. If you have any questions, please contact your Schiff Team Member on Monday, January 4, 2021.

Maryland – LLC’s , Sub S Corporations – Maryland MD 510 Payments due TODAY, December 31, 2020

Recently, the State of Maryland changed their tax laws as it relates, to the State of Maryland Taxes due from Pass Through entities, such as a Maryland LLC, Maryland Partnership and a Maryland Subchapter S Corporation. The new Tax Law, will allow you to pay your State Taxes through your entity, and receive a tax deduction. Please be sure to pay this Tax with Maryland Tax Form 510D. https://www.marylandtaxes.gov/forms/20_forms/510D.pdf. Please pay today, December 31, 2020, if you have not done so.

This only applies to Maryland Partnerships and Corporations, NOT SOLE PROPIETORSHIPS taxed as an LLC!

ALS Clinic at Johns Hopkins Hospital Baltimore – Cindy Schiff

As you have gotten to know Cindy, life was not about her, but about mankind. There will be no better way to honor her life with a contribution to research of the horrible disease of ALS. Contributions in Cindy’s name can be mail to:

Hopkins ALS Clinical & Education Fund
c/o Lora Clawson, CRNP
JHOPC – Suite 5070A 
601 North Caroline Street
Baltimore MD 21287

Or , you can pay on line at >>

https://secure.jhu.edu/form/als?fbclid=IwAR3RvQ3xmUM0vdcXfrcxvOI1XF7h1k5j58ARe8iWPvqtUx38lWl6lyV4QfM

Special “THANKS” to each of you, that have made a Contribution to the ALS Clinic at Johns Hopkins Hospital in Baltimore in honor of Cindy’s Name. I am so appreciative of each you and your generosity. The ALS Clinic in Baltimore, is amazed at the abundance of love as well!  My heart is filled with amazing warmth & comfort….Thank you!

ADCPA PODCAST on PPP Funds & Cindy Schiff & the ADCPA

As most of you know, the ADCPA produces a weekly PODCAST on Dental Practice Management as well as Dental Finance. The December 16^th PODCAST was on >>>What Dentists Need to do to Qualify for a New PPP Loan in the Next Round of Stimulus as well as was dedicated to Cindy & her life. If you would like to listen to this Podcast, please click on the Hyper Link below. I am grateful for Art Wiederman, CPA (ADCPA Los Angeles CA) for dedicating the PODCAST to Cindy & her life.

https://blubrry.com/art_of_dental_finance/71634748/what-dentists-need-to-do-to-qualify-for-a-new-ppp-loan-in-the-next-round-of-stimulus/

This morning the text of the new Additional Coronavirus Response and Relief (ACRR) legislation was released. If the legislation is passed by Congress and signed into law, it will include the following items:

1.  PPP Deductibility – Expenses used to obtain loan forgiveness will be deductible.

2.  EIDL Grant taxability – The EIDL Grant (up to $10,000 received in April 2020) will be tax free and related expenses will be deductible.

3.  EIDL Grant impact – The EIDL Grant will no longer reduce PPP loan forgiveness. Under the CARES Act, if a practice received a $100,000 PPP and $10,000 EIDL, it would be eligible for $90,000 forgiveness and be left with a $10,000 PPP loan. That adjustment is being eliminated allowing for the potential to obtain full forgiveness.

4.  Simplified application – PPP loans of under $150,000 will be eligible for a one page simplified forgiveness application but still must retain documentation and meet the requirements of the program.

5.  2^nd Round PPP – If your practice incurred a 25% or greater reduction in collections in any 2020 calendar quarter compared to 2019, it may be eligible for a 2^nd PPP loan. Most practices should have incurred such a reduction for the 2^nd quarter that includes April – June 2020. We need additional time and guidance to determine if there will be other limitations.

6.  Stimulus payments – Taxpayers with under $150,000 adjusted gross income (married filing joint) or $75,000 (single) will be eligible for an additional $600 stimulus payment or 2020 tax credit.

7.  Meals – Business meals provided by a restaurant paid in 2021 and 2022 will be 100% deductible but still require normal documentation including the business purpose, who attended, and what business was discussed. There is no change to business meals paid in 2020.

It is important to note that even if this legislation is passed without changes, it will take the Treasury Department, SBA, and IRS a few weeks or months to clarify some details. 

This is GREAT NEWS to all business owners! A early Christmas gift before Christmas!  :>)