You may have been one of the businesses that pounced on the hastily assembled Paycheck Protection Program in hopes of getting a loan. Many businesses succeeded, but some did not, and it's not always clear why. If you didn't, here are some clues why.
One of the most significant features of the SBA's Paycheck Protection Program is the forgiveness provision—the loans become grants for companies that use the loans to maintain their workforce levels. Companies that have met the stringent requirements need to fill out a form and follow instructions carefully—they include several measures to reduce compliance burdens and simplify the process for borrowers, including:
Like most new government programs, the PPP has been followed by a stream of clarifying guidance from the relevant federal agencies. Whether you have such loans already or are seeking to get them, you should be aware of the details.
The IRS has granted relief for 125 cafeteria plans, health flexible spending arrangements and dependent care assistance programs.
Health consequences aside, pandemics can wreak havoc on businesses, upending supply chains and employment models around the world. To help curb the spread of disease, public health officials may recommend that employees work from home, be placed on furlough or work fewer hours. In addition, the U.S. Department of Labor may provide guidance on how U.S. employers should handle wages during the pandemic.
The National Partnership for Women and Families says that "at some point, nearly everyone will need to take time away from work to deal with a serious personal or family health condition, or to bond with a new child." Yet only 19% of U.S. employees receive paid family leave through their employers.
Although the tax reform passed late in 2017 seemed to change everything, it actually had little effect on the earned income tax credit alone. But the credit is still complicated, and taxpayers should understand how it works.
If you're serious about paying off your mortgage quickly, realize that every dollar you add to your regular payment each month puts a bigger dent in your principal balance — and you don't have to double-down to make a difference. Adding even one extra payment each year knocks years off your mortgage.
The Employee Retention Credit has been designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by the coronavirus and quarantine.
The Paycheck Protection Program, part of the CARES Act, grants loans to businesses under generous terms. Even better, the government will forgive your loan if you meet certain conditions.
Keep in mind, however, that regulations and future adjustments can tweak certain provisions and that there are more details that a qualified professional can help you interpret.
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