The Internal Revenue Service posted an update on the ERC. Given the fluidity of the laws regarding the PPP Loan and the ERC, I’m fielding an enormous amount of questions regarding the changes. Let’s go through a few.
Can I do both a PPP Loan and an ERC?
Yes, you can now do both, but not at the same time. You cannot use the same payroll to claim the ERC that is also used on forgiveness for the PPP. To explain, let’s use a scenario.
You are an eligible entity for both the PPP and the ERC. You apply for and receive the PPP on February 14, 2021. This PPP money will last until May 15, 2021. You can claim the ERC on payroll from January 1, through February 13, 2021 as well as May 16 through June 30, 2021. The payroll in between will be used for forgiveness on Form 3508.
Can I amend a 941 in the 4th Quarter of 2020 to claim an ERC.
Yes. the IRS specifically addresses this issue in their findings. This is incredibly difficult tax work. Please don’t try to do this yourself. Again, if part of your payroll in the 4th Quarter of 2020 was or will be used for forgiveness on your PPP Loan, then you can only claim the credit on the remainder.
Can I deduct the expenses used for forgiveness on the PPP?
Yes. This was one of the new items in the PPP2 Legislation, but depending on what state you are in, you may not be able to deduct it on the state return. It is still deductible in Illinois, but not in Wisconsin or Utah. There are still additional changes that may be coming in this regard. I will try to keep all of you updated.
Does the EIDL Grant still reduce the amount of PPP Forgiveness?
The PPP2 Legislation supposedly fixed this, but the instructions and the form have not been changed yet. According to the existing form, if you received a $50,000 PPP Loan and an EIDL Grant of $4,000, then you are only allowed forgiveness on up to $46,000. We are still waiting on updated forms and guidance in this respect. If this is an issue on your forgiveness, I would wait until this is resolved. Again, stay tuned.
The updated IRS guidance can be found at the following web address.
Let me leave you with this.
After getting plenty of snow over the weekend, we now brace for freezing rain tomorrow and sub-zero temps beginning next week. My car actually got stuck several times on Sunday. I really miss my old Caddy.
We’ve been spoiled with extremely mild winters. Who isn’t used to these days with a high in the upper thirties with no snow in sight? When I was boy growing up in Chicago, they didn’t even consider closing schools until there was a high of less than five below. I remember being home from school for six consecutive school days back in the winter of ’71.
I’ll never forget actually telling my Grandma that I wanted to go back to school.
Who could possibly forget the blizzard of ’79? I was twelve years old and it took four shovels full of snow to go from the top of the snow down to the sidewalk. I shoveled for two straight days just to get the walks open. I’d go out for an hour, and come back in to get warm. It took us three days to get my mom’s car out of the garage so that she could go to work.
My mom still talks about the snow of ’67. She had a ’57 T-Bird at the time. The only way she found it once she got off work that day, was by seeing the radio aerial sticking out of the snow. I was a seven-month-old baby during that one who caught double pneumonia.
My Grandpa sat up with me nights, rocking in a rocking chair, so that I could sleep in his arms and regain my strength. I owe my life to him. The doctor said I’d be dead for sure, if it wasn’t for that simple act of love during that storm. There’s no way the paramedics would have ever gotten to me.
The next time you’re shoveling or outside when it’s ten degrees, please realize that this is nothing. We could still have a Mayor named Bilandic.
We’re all going to get through this. Let’s get through it together.
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