2020 has been anything but normal. From a national quarantine to one of the largest economic downturns in American history, it can be hard to keep up with everything that has happened so far this year. Our national, state, and local governments have been working around the clock in an effort to keep Americans healthy and financially safe -- a tall order, especially for smaller local government groups. As a result, local tax laws and incentives have changed dramatically in 2020. This article highlights a few of the major state and local incentives in 2020.
The Coronavirus Aid, Relief, and Economic Security, or CARES Act, is the largest economic relief bill in American history. This bill was the foundation for the rebates that millions of Americans received earlier this year. For those who are yet to receive their rebate, they can expect to see it on their 2020 tax return. On a local level, loan forgiveness and government relief usually count as taxable income for both individuals and businesses. The CARES Act is specifically exempt from these limitations and will not be counted as taxable income for either businesses or individuals. One of the more detailed aspects of the CARES Act, especially for small businesses, is the Paycheck Protection Program.
Paycheck Protection Program Loans
The Paycheck Protection Program, or PPP, is a small business incentive that gives loans to businesses willing to keep a certain amount of their employees on staff and working full time. This loan will then be completely forgiven as long as certain retention criteria are met. In order for this loan to be forgiven, small businesses must use the money for payroll costs, interest on mortgages, rent, and utilities, though 60% of the amount must be used for payroll.
This program is essentially the government’s way to keep people off unemployment and keep small businesses running through the pandemic. To apply for this program, go through any existing SBA 7(a) lender or through any federally insured depository institution, credit union, or participating farm credit union. Click here to download your PPP borrower application. Much of the money invested in these programs will come from the state and local level after it is funneled through from the CARES Act itself. Once you have been approved, you will receive step-by-step guidelines for adherence to the loan requirements, in order for the sum to be forgiven.
If you are interested in learning more about how to protect your small business during these financially trying times, contact VonLehman’s State and Local Tax professionals today at 800.887.0437 or firstname.lastname@example.org. Our expert staff will make sure that you are taking advantage of every benefit in your local tax code.