Member of Russell Bedford International, a global network of independent professional service firms.
Member of Russell Bedford International, a global network of independent professional service firms.
Please note that this blog is based on laws effective on April 2, 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.
With the ink barely dry on the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, there have already been several hot topics surrounding the benefits it provides. Below are the top 5 tax provisions that we believe will be most impactful to our clients. You are welcome to listen to these key points in podcast format and then scroll down to read more details for each topic.
What It Means:
Eligible taxpayers will receive a payment of up to $1,200 ($2,400 for married filing jointly) plus $500 for each “qualifying child” (under 17 years of age).
What We Advise:
If you have not yet filed your 2019 return, it may be wise to delay filing in order to maximize the advance payment if your 2018 income is less than 2019.
What It Means:
A refundable payroll tax credit for 50% of wages paid between March 12 and December 31, 2020 for the first $10,000 in wages per employee. Eligible businesses will be required to have full or partial suspension and a significant (more than 50% decline) in gross receipts.
What We Advise:
DO THE MATH! In most cases, the benefits of the forgivable Payroll Protection Loan will outweigh both the employee retention tax credit and deferral.
What It Means:
2018, 2019, and 2020 losses can now be carried back 5 years to fully offset income, as opposed to strictly carried forward. This will allow businesses to recoup previously paid taxes, including in higher tax years. After applying the carryback, certain net operating losses can be carried forward and offset 100% of taxable income, instead of only 80%.
What We Advise:
The CARES Act provides opportunities to businesses to review prior loss/expense limitations and determine if returns should be amended to recoup prior year taxes. At CK, we are looking at all of our business clients’ results for this opportunity and amending returns where beneficial.
What It Means:
“Qualified Improvement Property” (QIP) includes any improvement to an interior portion of a building that is nonresidential real property.
What We Advise:
If you have previously placed QIP in service in 2018 and 2019, review with your tax advisor whether it is beneficial to amend returns in order to claim this benefit. If so, utilize the new net operating loss provisions to recoup taxes paid in years prior to 2018.
What It Means:
The required minimum distributions from certain retirement plans (for example 401(k)s and IRAs) are waived for calendar year 2020.
What We Advise:
Tax planning with RMD’s will be critical in 2020. Just because you are not required to take an RMD, it doesn’t mean you shouldn’t. Work with your advisors to project your taxable income, especially in light of tax provisions that could significantly reduce your 2020 taxable income. 2020 might be a good time to withdraw from your plan if you are in a low tax bracket, although the RMD is not required.
In these rapidly changing times, know that CK has your back when it comes to supporting your tax and accounting needs. Please call us at 630-953-4900 if you’d like to discuss how any of these provisions affect you.
These are certainly trying times and we want to reiterate that Cray Kaiser is here for you. As things continue to evolve in light of the COVID-19 pandemic, we at CK are taking additional precautions for the benefit of our team members and our clients.
Effective immediately:
We want to remind our clients of our portal access and your ability to safely and securely share your information with our team. We ask that you email efile@craykaiser.com to request your portal access. This will eliminate the need for you to drop off your tax information at our office.
Thank you for your patience and understanding during this challenging time. We wish you, your family, and your business health and safety. We will continue to support you as best as we can while keeping each other’s health a priority. If any changes occur during the course of the next few days, we will update our website.
In this audio blog, CK Principal Karen Snodgrass walks us through the complexities of Illinois taxes. If you live and/or own a business in Illinois, you know that taxes have continued to rise. To put it simply, it’s a tough time to be a resident. That’s why many individuals and companies are looking for ways to move out of state and reduce their tax burden.
But is it as simple as moving out of Illinois? Unfortunately, it’s not. There are many steps required to establish domicile in a new state, and even then, Illinois will look for ways to keep taxing you. So, if you’re one of many residents considering a move out of Illinois, listen to the audio blog below to learn more about what that entails:
If you have questions about your tax situation, please don’t hesitate to contact Cray Kaiser today.
In Cray Kaiser’s first audio blog, CK Principal Deanna Salo shares the journey of a closely-held business as they craft their buy-sell agreement. When the owners of the company were looking to exit, they decided it was time to dust off their original buy-sell agreement from the 1980s. What followed was a two-year process of education, emotion, and collaboration, ending with the signing of their brand-new buy-sell agreement.
As Deanna tells the story of this business’ journey, she gives insights into why buy-sell agreements are so important, what timing might look like in the process, aha moments that business owners often experience, and common questions she’s asked about buy-sell agreements.
Click below to listen:
If you have questions about your company’s buy-sell agreement or would like assistance putting one together, please don’t hesitate to contact Cray Kaiser today.
