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COVID-19 Update

To all our clients, 

We have compiled and summarized the various Financial Relief Programs available for individuals, small businesses, business owners, and their employees. 

PPP SECOND DRAW EXTENDED TO MAY 31, 2021

Congress has passed the PPP Extension Act of 2021 that extends the deadline to apply for the second draw of the Paycheck Protection Program from March 31 to May 31, 2021.  

It's expected to be signed by President Biden this week or next week. 
Remember the PPP loan will be fully forgiven if you expend at least 60% on payroll and 40% on other qualifying costs like rent, mortgage interest, utilities, covid protection equipment and supplies. 
Notice: The SBA website has not been updated, you will still see the March 31 deadline, it should be updated as soon as the President signs the bill.
You can apply for the PPP with your bank, or you can find an SBA approved lender here:  https://www.sba.gov/funding-programs/loans/lender-match

Assistance For Individuals

The third round of Economic Impact Payments was authorized by the American Rescue Plan Act of 2021 as an advance payment of the tax year 2021 Recovery Rebate Credit.

The IRS started issuing the third Economic Impact Payments to eligible individuals on March 12, 2021, with more payments sent by direct deposit and through the mail as a check or debit card in the weeks that follow. The IRS will continue to issue payments throughout the year as tax returns are processed.

Check Get My Payment for the status of your third Economic Impact Payment.

Do not call the IRS as our phone assistors don’t have information beyond what is available on IRS.gov.

Check the Questions and Answers about the Third Economic Payment for more information.

Eligibility

Most eligible people won’t need to take additional action to get a third payment.

Due to new income limitations, some individuals won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit.

Generally, someone is eligible for the full amount of the third Economic Impact Payment if they:

  • are a U.S. citizen or U.S. resident alien (and their spouse if filing a joint return), and
  • are not a dependent of another taxpayer and
  • their adjusted gross income (AGI) is not more than:
    • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
    • $112,500 if filing as head of household or
    • $75,000 for eligible individuals using any other filing status

Payments will be phased out – or reduced -- above those AGI amounts. This means people will not receive a payment if their AGI is at least:

  • $160,000 if married and filing a joint return or if filing as a qualifying widow or widower
  • $120,000 if filing as head of household
  • $80,000 for eligible individuals using any other filing status

Amount of Third Economic Impact Payment

The third Economic Impact Payment amount is:

  • $1,400 for an eligible individual with a valid Social Security number($2,800 for married couples filing a joint return if both spouses have a valid Social Security number or if one spouse has a valid Social Security number and one spouse was an active member of the U.S. Armed Forces at any time during the taxable year)
  • $1,400 for each qualifying dependent with a valid Social Security number or Adoption Taxpayer Identification Number issued by the IRS

Getting Your Payment

Most eligible individuals will get their third Economic Impact Payment automatically and won’t need to take additional action. The IRS will use available information to determine your eligibility and issue the third payment to eligible people who:

  • filed a 2020 tax return
  • filed a 2019 tax return if the 2020 tax return has not been submitted or processed yet
  • did not file a 2020 or 2019 tax return but registered for the first Economic Impact Payment with the Non-Filers tool in 2020
  • are federal benefit recipients who do not usually file a tax return. The IRS is working with Federal agencies to get updated information to issue the third Economic Impact Payment at a date to be determined.

Third Payments Differ from Previous Economic Impact Payments

The third payments differ from the earlier payments in several respects:

  • Income phaseout amounts changed. Payments begin to be reduced for individuals with adjusted gross income of more than $75,000 (or $150,000 if married filing jointly). The reduced payments end at $80,000 for individuals and $160,000 for married filing jointly. People above these levels will not receive any payment.
  • Payment amounts are different. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while married filers with two dependents will get $5,600. 
  • Qualifying dependents expanded. Unlike the first two payments, the third payment is not restricted to children under 17. Eligible individuals will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.

Second Economic Impact Payments

You may be eligible to get a second Economic Impact Payment of $600. In most cases, those who are eligible will receive a payment automatically. 

Check your payment status.

Latest Updates on Coronavirus Tax Relief (Second Payment)

The Internal Revenue Service and the Treasury Department have started delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year. 

No action is required by eligible individuals to receive this second payment. The IRS reminds taxpayers that the payments are automatic, and they should not contact their financial institutions or the IRS with payment timing questions.

As with the first round of payments, most recipients will receive these payments by direct deposit. For Social Security and other beneficiaries who received the first round of payments via Direct Express, they will receive this second payment the same way.  

IRS Economic Payment and Tax Relief
IRS check of $600 per adult and $600 per child up to 17 years old when AGI on the taxpayer 2019 tax return is not more than $75,000 or $150,000 if married filing jointly. No action needed, if you qualify the IRS will send the check or direct deposit into your bank account using the 2019 tax information. 

Get the status of your payment herehttps://www.irs.gov/coronavirus/economic-impact-payments 

Unemployment Benefits
Unemployment benefits have been extended to most employees, including 1099 independent contractors and sole-proprietorships. If you had to layoff your employees/IC's they can apply for unemployment benefits. 
Apply for unemployment benefits in FL here: http://www.floridajobs.org/
Unemployment benefits in other states: https://www.dol.gov/general/location

Employer Paid Leave Requirements
The Families First Coronavirus Response Act (FFCRA or Act) requires employers with fewer than 500 employees to provide their employees with up to two weeks (80 hours) paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. 
The IRS will reimburse the employer the salary of the covered employee as a payroll tax credit with the following filing of form 941 quarterly payroll tax return. 

Assistance For Small Businesses

UPDATE for 2021

On December 21, 2020, Congress passed the “Consolidated Appropriations Act, 2021” which outlines additional Paycheck Protection Program (PPP) funds as well as an extension of the employee retention tax credit (ERTC)

PPP (Second Draw)

UPDATE: With the new legislation, your business has the option to claim a second draw of the PPP loan. To qualify for the second draw your revenue must have dropped at least 25% compared to the same quarter of the previous year.

Second-time PPP borrowers will generally be eligible to borrow an amount equal to 2.5 times their average monthly payroll costs.

However, those seeking PPP loans from the food service and accommodation industries – hotels, restaurants and the like – that are businesses classified under the North American Industry Classification System (NAICS) beginning with the number 72 are eligible for loans that amount to 3.5 times their average monthly payroll.

Forgiveness of loans

Borrowers are still required to spend at least 60% of the funds on payroll over a covered period of either 8 or 24 weeks to receive full forgiveness.

The other 40% may be used on eligible costs, including certain mortgage expenses, rent and utility payments.

PPP2: New allowances for additional expenses

Under the renewed program, the list of eligible non-payroll expenses has been expanded to include four new categories, including:

  • Costs for personal protective equipment and adaptive investments that help a PPP loan recipient comply with federal and/or health and safety guidelines related to COVID-19;
  • Outlays for on software, cloud computing, human resources, and accounting needs;
  • Any spending not covered by insurance that are related to property damage due to public disturbances that occurred during 2020;
  • Spending to suppliers that covered costs essential to the business operations at the time the outlay occurred. For instance, restaurants’ purchases of perishable goods can now qualify.

Important tax changes

An important change outlined in the new regulation is that forgiven PPP loans will be completely tax-free, and any usually-tax-deductible business expenses that are paid for with PPP loans will also continue to be deductible.

The Consolidated Appropriations Act, 2021 (CAA 2021), H.R. 133, Division N, Section 276, provides that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.

Specifically, the updated language says “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided” by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act). This provision applies to loans under both the original PPP and subsequent PPP loans.

One other major change in the bill concerns how PPP loans interact with the Employee Retention Tax Credit (ERTC). Originally, businesses that took out PPP loans were prohibited from using the ERTC to reduce their tax burden and vice versa. This has been changed so businesses can take advantage of both PPP and the ERTC in 2020 and 2021.

The new PPP loan forgiveness application has also been simplified for loans up to $150,000.  

Employee Retention Credit

UPDATE: With the new legislation, your business has the option to claim ERC credits from both from 2020, and 2021. Check the “Who is eligible?” section below to determine if your company can take advantage of this refundable tax credit. 

Credit claims from 2020:

Employers can claim the Employee Retention Credit (ERC)—a refundable tax credit for 50% of up to $10,000 in wages, per employee, per year.The credit is available for eligible employers whose businesses have been financially impacted by COVID-19. 

This is only effective for wages paid March through December 2020. If your company has 100 or fewer employees, you can claim the ERC in Gusto. If your company has more than 100 employees, do not claim the ERC in Gusto unless all employees are currently being paid, and none of them are working.

[NEW] Claims for 2021:

Employers can now claim the Employee Retention Credit (ERC) for 70% of up to $10,000 in wages, per employee, for Q1 and Q2 of 2021. The credit is available for eligible employers whose businesses have been financially impacted by COVID-19. 

This is only effective for wages paid January 1, 2021 through June 30, 2021. If your company has 500 or fewer employees, you can claim the ERC in Gusto.

Gusto is actively working on supporting this in our platform. Please check the COVID-19 tab in your Gusto account for updates.

ANOTHER IMPORTANT UPDATE IS THE 100% DEDUCTION FOR BUSINESS MEALS FOR 2021 AND 2022. THIS IS FOR BUSINESS MEALS, MEETING WITH CLIENTS IN RESTAURANTS, OFFICE MEALS, INCLUDING DELIVERIES AND TAKE OUTS. 

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Here is the information available for the Federal Assitance Program for Small Businesses
More information on the available assistance programs: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

In summary, there are two types of loans available for small businesses:
1.- Paycheck Protection Program (PPP) to help pay payroll if you maintain the employees or rehire them soon after the shutdown. The good thing about this loan is that you don't have to repay it back if you used the money to pay the payroll, mortgage interest, rent, utilities. 
How to Apply
File your application with a SBA approved financial institution. 
Lenders may begin processing loan applications as soon as April 3, 2020 
Application Form Sample (get from your bank their actual application): 

LOAN FORGIVENESS

You don't have to pay the loan back if you used at least 75% of the money to pay payroll costs and 25% can be used to pay mortgage interest, rent, and utilities. Bear in mind you should have the same number of employees and pay them the same amount of salary as before you applied for the loan in order to qualify for the full forgiveness. 

***  PPP LOAN FORGIVENESS APPLICATION  ***

https://www.sba.gov/document/sba-form--paycheck-protection-program-loan-forgiveness-application

2.- Economic Injury Disaster Loans and Loan Advance
The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
How to Apply
File your application online: https://covid19relief.sba.gov/#/

The above is a summary of the most relevant information that may be of interest to you.
Find all SBA Covid-19 available programs here:

Social Security tax deferrals under the CARES Act

Overview
As part of the CARES Act, employers can defer the employer portion of their federal Social Security taxes for the rest of 2020. For tax payments you defer in 2020, half will be due in 2021 and half in 2022.
Who is eligible for the Social Security tax deferrals program?
All employers are eligible for this program. If you are not planning to take a Paycheck Protection Program (PPP) loan (CARES Act Sec. 1102), you can defer for the entirety of 2020. If you apply for and receive a loan through the PPP, you can defer taxes up until the date your loan is forgiven.
Since Gusto isn't aware of whether a loan has been or will be forgiven, we won't prevent employers who receive a forgivable PPP loan from opting into Social Security tax deferrals in Gusto. Keep in mind that if your loan is forgiven, you'll need to turn off deferrals in Gusto—otherwise, you'll be liable for repaying Social Security taxes plus any applicable penalties and interest.

About the employee retention credit

What is the employee retention credit?

As part of the recent federal CARES Act, the Employee Retention Credit aims to help employers keep employees on their payroll during COVID-19.

Eligible businesses can claim a tax credit of 50% of the first $10,000 of each qualified employee’s wages (including qualified health plan costs). This tax credit will be applied towards an employer’s share of Social Security taxes.

Who is eligible for the employee retention credit?

You can claim the employee retention credit:

  • if your company’s operations are fully or partially suspended due to COVID-19 OR
  • if your gross receipts are under 50% of last year’s during the same quarter (until the quarter after your gross receipts recover to 80% or more)

You are not eligible for the employee retention credit:

  • if your company receives a loan via the Paycheck Protection Program
  • on wages already counted for credits under emergency paid sick leave or family and medical leave programs

Note: if you have more than 100 employees, you can only receive this credit if your operations are fully suspended.

Assistance for Businesses in Florida

As most of my clients are located in Florida, here is the info for a Florida Small Business Emergency Bridge Loan: https://floridadisasterloan.org/
How to Apply:

The Florida SBDC Network also developed a guide to these programs that is available here: http://floridasbdc.org/wp-content/uploads/2020/04/COVID-19-Magazine-Insert_Florida-SBDC-Network_9-Pages.pdf

For our clients out of Florida, please email me for assistance in your state.

OTHER NON-FEDERAL PROGRAMS

National Grant and Loan Programs

  • Facebook Small Business Grants Program announced it will be providing $100 million in cash grants and ad credits for up to 30,000 eligible small businesses in 30 countries.  Applications are expected open for Miami-Dade County on April 22nd. In the meantime, more information on this program can be found here:  https://www.facebook.com/business/grants
    • The company also has a Business Resource Hub that includes free information for small businesses on how to deal with impacts from COVID-19, best practices, and a self-assessment tool that you can download.  That site is here:  https://www.facebook.com/business/boost/resource
  • Samuel Adams and the Greg Hill Foundation announced they are bringing the Restaurant Strong Fund to 20 total states (including Florida) to aid the restaurant workers impacted by the COVID-19 closures. 
    • To qualify, an applicant must:
      • Submit a completed Application Form
      • Be a Full-time employee (Minimum of 30 hours total per week, can be multiple restaurants)
      • Be Employed for 3 months or longer at the same location
      • Have worked in a restaurant, bar, cafe or nightclub located in one of the 20 states (including Florida)
      • Submit the last two full-time pay stubs
    • More information and applications available at:  https://www.restaurantstrong.org/index.html
  • The Save Small Business Fund, an initiative of the U.S. Chamber of Commerce Foundation, opens on April 20th.  Funded by corporate and philanthropic partners, the Save Small Business Fund is a collective effort to provide $5,000 grants to as many small employers as it can. 
    • Criteria include:  1) Employs between 3 and 20 people; 2) Be located in an economically vulnerable community; and 3) Have been harmed financially by the COVID-19 pandemic.
    • More information and applications at: https://savesmallbusiness.com/#apply
  • The James Beard Foundation Food and Beverage Industry Relief Fund is providing critical financial assistance to small, independent restaurants that, due to the COVID-19, have an immediate need for funds to pay set operating expenses and keep from going out of business. 
    • The fund exhausted its initial round of funding but you can encouraged to keep checking their website for when the program re-opens.  More information here:  https://www.jamesbeard.org/relief
  • The Bartender Emergency Assistance Program was created by the USBG National Charity Foundation to assist bartenders or family members impacted by catastrophic events. 

 

Local Grant and Loan Programs

  • The SOBEWFF® & FIU Chaplin School Hospitality Relief Fund awards grants of up to $15,000 per business ($500 per employee) to independently owned restaurants and bars in Miami-Dade, Broward and Palm Beach counties.  For more information and to apply, visit:  https://sobewff.org/industry-relief/

  • To assist North Miami businesses during the threat of COVID-19 pandemic, the North Miami Community Redevelopment Agency (NMCRA) has created two (2), emergency relief grant programs to aid businesses that have been severely impacted by the pandemic.  More information on the  Emergency Relief for Essential Businesses and  Emergency Relief to Jump Start Businesses programs is available here: https://www.northmiamicra.org/sites/default/files/u3982/4_15_20_nmncra_miamitimes.pdf

I hope you find this information helpful to you, you can contact us (preferable by email) with any questions or assistance with your applications.  

Stay healthy!  

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Our response to Covid-19

The health and safety of our TaxApro Accounting Firm LLC team and clients in Miami, FL is our top priority. With the COVID-19 virus having an increasing impact in our community, we want to let you know how our business is addressing this situation. Currently, our offices are not taking new appointments. We are fully operative working from home office though and we will attend any already scheduled meeting. We urge you to send us your tax documents electronically. To accommodate any concerns, we are following the guidance of the Centers for Disease Control (CDC) and have:

  • Being working from home office as much as we can
  • Attend in person only pre-scheduled meetings
  • Increased the cleaning and sanitation of our offices
  • Added additional alcohol-based sanitizer
  • Informed our staff if anyone is feeling ill, they need to stay home.

We are also here to serve you via the phone and using our online portal.

We are committed to serving our clients with the care they deserve, and we are confident we are taking precautionary measures to promote the health and safety of our staff and clients. Please check with us on any changes in our work schedule and call us at (786) 505-0017 if you have any questions.

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