Can't Stop, Won't Stop

Jan 21, 2021.  We are understanding more and more about the provisions of the Consolidated Appropriations Act signed late last month.  Here are some pointers from Laurel for freelancers:

Payroll Protection Program (PPP)

• Expenses used for forgiveness of PPP loans ARE tax deductible.
• Applications for first draw PPP loans have re-opened. See Brooklyn Coop’s PPP Resource page for information on how to apply.
• If you already got a PPP loan and can demonstrate a 25% decrease in gross revenue for your business, you may be eligible to get a Second Draw PPP loan
• First draw and second draw PPP loans are both forgivable.
• Forgiven PPP loans are not considered cancelled debt.

Employee Retention Credit (ERC)

• PPP loans no longer make employers ineligible for the Employee Retention Credit (ERC).
• Businesses are only eligible for the ERC if they have employees.
• The ERC can be quite lucrative, and the details are quite complex, especially if you also got a PPP loan, so reach out to your payroll processor and/or accountant for more info.

Credits for Sick Leave and Family Leave for the self-employed

• Many self-employed individuals will qualify for a credit to cover days they couldn’t work due to covid-19 (including because they had to care for a dependent who was home schooling).
• The credit is claimed on your 2020 tax return with Form 7202.
• If you do have employees, you can claim this credit with your payroll tax returns (form 941)

Education credits

• If anyone on your tax return is a student and they received funds in 2020 from the various grants and scholarships that were targeted towards COVID-related issues, those amounts do not have to be deducted from their eligible expenses for the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit.