New Report Shows Consequential Impacts of SBA Pandemic Relief U S. Small Business Administration
If the employer’s payroll/attendance records accurately reflect the location from which the work is done, those records can be used to determine the portion of the work done in Massachusetts and as such the wages subject to Massachusetts personal income tax withholding. Alternately, the employer may use any other reasonable method to determine the portion of the nonresident employee’s work performed at locations in Massachusetts, including estimating that portion based on a certification provided by the nonresident employee if taken in good faith. The employer should retain documentation to verify its method and if it is relying on employee certification, the employer should have a signed statement from the employee attesting to the number of days the employee worked in Massachusetts or expects to work in Massachusetts. For the period March 10, 2020 through September 13, 2021, Massachusetts applied emergency pandemic income sourcing rules to wages or other compensation paid to employees who worked remotely (working from home or a location other than their usual work location) due to the COVID-19 Pandemic. For the period beginning after September 13, 2021, wages paid to a nonresident employee will no longer be sourced based on where the employee worked prior to the COVID-19 state of emergency. Instead, the wages for such period will generally be sourced based on where the employee’s work is actually performed.
Unemployment Benefits and Unemployment Fraud
The deadline for filing individual income tax returns and making payments (including extension payments) was extended from April 15, 2021 to May 17, 2021. The Massachusetts personal income tax does not allow the deduction of an NOL.57 Therefore, the changes to the NOL rules adopted by CTRA have no impact for Massachusetts personal income tax purposes. Massachusetts follows the Code as currently amended and in effect with respect to the federal rules governing FSAs.30 Therefore, to the extent that an FSA qualifies as an eligible plan for federal purposes, it will also qualify as such for Massachusetts purposes. The Acts affect several Massachusetts personal income tax provisions.
The questions you will be asked in the portal correspond to those asked on SBA Form 3508, SBA Form 3508EZ, or SBA form 3508S. Effective March 13, 2024, all borrowers, regardless of loan size, can use SBA’s direct forgiveness portal. To stay up to date on the latest information and upcoming programs from Farm Management, sign up for our newsletter. The telecommuting rules that were put in place to minimize disruption for employers and employees during the Massachusetts COVID-19 state of emergency expired as of September 13, 2021. Small Business Administration (SBA) on the 39 open pandemic-related recommendations referenced in Office of Inspector General (OIG) Report 23-09, COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape. If you need additional assistance, please reach out to your local Small Business Development Center, Women’s Business Center, SCORE chapter, or SBA District Office.
Apply for a non-COVID EIDL relief loan from SBA
Therefore, recipients of either Shuttered Venue Operator Grants or Restaurant Revitalization Grants that are subject to the corporate excise may exclude such grants from their Massachusetts gross income. Also, recipients of either Shuttered Venue Operator Grants or Restaurant Revitalization Grants may deduct expenses paid using such grants if the expenses are otherwise deductible for federal tax purposes. Properly reporting EIDL grants on tax returns requires understanding their tax-exempt status and ensuring accurate financial classification. While EIDL grants are not included in gross income federally, distinguishing them from other forms of financial assistance is essential. For instance, loans or forgivable loans may require different accounting treatments, such as being recorded as liabilities until forgiven. Misclassification on tax documents could lead to compliance issues or penalties.
SBA Achieves Historic Small Business Lending for Fiscal Year 2020
- These grants are not excluded from gross income under federal law and should be reported as regular farm income on the federal income tax return’s Schedule F.
- Advocacy conveyed the need for a legislative fix for the issue to the House and Senate Small Business Committees in a December 15, 2020, letter.
- The American Rescue Plan includes additional relief for small businesses struggling as a result of the pandemic.
- This initial deferment period was subsequently extended through March 31, 2021.
Complex financial structures, such as partnerships or S-corporations, present unique challenges. For example, partnerships must consider how EIDL grants affect partner capital accounts, while S-corporations must assess their impact on shareholder distributions. A professional can provide tailored strategies to address these complexities and prevent unintended tax consequences. SBA continues to offer other funding options for small businesses, including traditional SBA loans. “In response to the unprecedented challenges faced by small businesses this year, the Trump Administration provided more than three-quarters of a trillion dollars in financial assistance to support impacted small businesses.
What if a nonresident’s former work location in Massachusetts closed permanently?
To determine the portion of her wages apportioned to Massachusetts for 2021, the non-resident employee must multiply her total wages by a fraction, the numerator of which is her 80 Massachusetts workdays, and the denominator of which is her total 240 workdays. Because he worked for the same employer in 2019 and 2020, the non-resident employee determined his Massachusetts workdays for the period March 10, 2020 through December 31, 2020 using his Massachusetts workday percentage from 2019, or 25%. The non-resident employee must similarly determine his Massachusetts workdays for the period January 1, 2021 through September 13, 2021 using his 2019 Massachusetts workday percentage. In contrast, from September 14, 2021 through December 31, 2021, the nonresident employee must determine his Massachusetts workdays based on the number of days he actually worked in Massachusetts, which would be zero. His total Massachusetts workdays for 2021 is 40 (25% x 160) plus 0, for a total of 40.
- The Paycheck Protection Program is a lifeline for businesses who are currently struggling due to COVID-19.
- When a workday is spent working partly in Massachusetts and partly elsewhere, the day is considered a day spent working in Massachusetts, unless the nonresident can prove that he worked outside Massachusetts for more than half the day.
- “In response to the unprecedented challenges faced by small businesses this year, the Trump Administration provided more than three-quarters of a trillion dollars in financial assistance to support impacted small businesses.
- Starting on May 17, 2021, DOR will send notices to those who are eligible for a deduction.
Each forgiveness form has unique instructions for documentation that must be submitted with your loan forgiveness application. For detailed instructions, refer to your chosen forgiveness form for clear guidance. SBA has notified 7(a), 504, and Microloan lenders that it will pay these borrower loan payments. Lenders are to report to SBA periodically on the amounts due once a loan is fully disbursed.
COVID-19 relief options
Many farmers may have received other grants funded by CARES Act money provided to their state. In Wisconsin, these programs included the Wisconsin Farm Support Program and the We’re All In Small Business Grant. These grants are not excluded from gross income under federal law and should be reported as regular farm income on the federal income tax return’s Schedule F. The legislation clarifies tax treatment for Massachusetts personal income taxpayers (which includes unincorporated businesses reporting on Schedule C, partners in a partnership, and individual shareholders of an S corporation) and Massachusetts corporate excise taxpayers.
Get help with your PPP loan
These include payments for necessary personal, family, living expenses—or, more broadly, payments to promote the general welfare. You just checked ma clarifies 2020 tax treatment of ppp income eidl grants and sba debt relief subsidies your bank account and noticed that both your EIDL advance for $10,000 and PPP loan for $100,000 were funded today. This will be handled by the entries in Schedule M-1 and M-2 in TurboTax and on your corporate income tax return. The EIDL advance grants are non-taxable income, but they are taxable to California.
Anyone who filed their 2020 Massachusetts tax returns reflecting the PPP loan or the EIDL Advance as taxable income can amend their tax returns to have those taxes refunded. Please reach out to your tax preparer if you think your 2020 Mass returns might have picked up PPP loans or EIDL Advances as taxable income. In response to the COVID-19 crisis, Congress has passed numerous programs aimed at helping small and medium-sized businesses survive the resulting economic downturn. These include grants and loans (which can be forgiven if certain conditions are met) to help businesses experiencing a cash-flow drought in 2020 and the beginning of 2021. ARPA amends Code § 162(m) to further limit the deduction of executive compensation by publicly traded corporations. Prior law limited the deduction to $1,000,000 for the three highest paid corporate officers.
R&D Expert: Capitalization, Amortization Requirement Hurts Smaller Businesses
The Targeted EIDL Advance provided funds of up to $10,000 to applicants who were in a low-income community, could demonstrate more than 30% reduction in revenue during an eight-week period beginning on March 2, 2020, or later, and had 300 or fewer employees. Your lender can provide information about the progress of your forgiveness application. SBA Form 3508 and SBA Form 3508EZ do require a borrower to provide additional documentation upon forgiveness submission. Businesses and individuals impacted by recent disasters in Texas may be eligible for SBA assistance. CTRA amended Code § 172 to allow certain farmers to elect to disregard specific limitations on the federal net operating loss (“NOL”) deduction for losses incurred in tax years, 2018 through 2020. TCDTRA and ARPA made numerous changes to the federal Earned Income Tax Credit (“EITC”).6 These changes generally expand eligibility for the credit, and the amount of the credit, available under Code § 32.
This income must be reported on your 2020 Massachusetts Individual Income Tax return Form 1 for residents or Form 1-NR/PY for nonresidents or part-year residents whether you are eligible for a deduction or not. Under the enactment, the forgiven PPP and EIDL loans that businesses received from the Federal government during the pandemic will not be counted as taxable income, and these businesses can also deduct the costs of expenses that those loans paid for. The new law largely conforms California law to the Federal rules relating to deductibility of expenses paid with funds from forgiven PPP loans.Your bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month. Your signed PPP loan contract stated you would produce monthly, government ready financials. If you don’t, you could suffer penalties and fines or trouble with an audit. Previously, anything you spent your PPP loan on was not going to be tax deductible, much to the frustration of CPA’s everywhere.
