PAYROLL TAX PAYMENT DEFERRAL
Thank you for subscribing to our Newsletter MABETAX May 2020. Employers can defer payment of their 6.2% share of Social Security tax on wages paid from March 27 through December 31, 2020. A portion of the deferred amount will be due in December 2021 and the other half on December 31, 2022. Individuals that are self–employed can defer 50% of the self employment tax they owe. Business that receive a Small Business Administration paycheck protection loan (SBA) under the CARES ACT do not qualify.
WE CAN HELP YOU
MABE International Advisors, Inc. we are experts in accounting and tax matters and we can devise the right fiscal strategy for your business, aimed at reducing liabilities and maximizing your profits. Proper planning is essential after the impact of Covid–19 to keep tax obligations low for all types of businesses.
Our firm has extensive experience in tax planning and what is required for different types of business. We understand how tax regulations apply to business in different industries and how to implement tax-planning methods that will reduce your liability. For more information call: 281.741.3691, to request a free consultation online or if you are a foreign national who must file a U.S. tax contact us at:
https:/www.mabetax.com/contact-us
The CARES ACT allows businesses impacted by the coronavirus to take a tax credit against payroll. Business must retain and continue to pay workers, the credit of up to $5,000 per paid employee offsets the employer 36.2% share of Social Security taxes, with excess refundable. This applies from March
13,2020 through December 31,2020. If the business averaged more than 100 full-time employees, qualifying wages are paid when the employee does not provide services. For smaller firms all wages are eligible for the credit. The program is available to all employers with a trade or business that was operational during 2020 and was fully or partially suspended from operations due to Covid 19 mandatory government orders, limiting commerce, travel, or group meetings or whose gross receipts decreased more than 50% compared to the same quarter in 2019.
A bill pending for a vote in the Senate would double the covered period of PPP spending to 16 weeks but would not change the 75% payroll cost requirement. Critics of the eight-week loan forgiveness period have said that it doesn’t offer enough flexibility for businesses affected by state and local governments, keeping many types of businesses closed or operating at significantly reduced capacity to slow the spread of COVID-19.
Critics of the 75% rule contend that it does not accommodate businesses for which payroll is not 75% of monthly expenses or those whose employees haven’t been able to work because of government-imposed business closures.
The Tax Cuts and Jobs Acts (TCJA) of 2017 brought new changes on how business are taxed and introduced a new provision that affects companies with foreign business income, the GILTI tax (Global Intangible Lowł axed Income). The objective of GILTI is to discourage U.S. based multinational corporations to shift profits out of the U.S. into low tax jurisdictions and limits the incentive for U.S. multinationals to move their headquarters outside of the U.S.
The TCJA limited the deduction for net business interest to 30% of adjustable taxable income. The CARES ACT increases the 30% of adjustable taxable income (ATI) limit increasing the amount of interest expense business are allowed to deduct to 50 % of ATI for 2019 and 2020. Business can use their 2019 ATI for 2020 interest deductions. This change is intended to reduce the cost of raising cash through debt allowing companies to finance their continued operations.
The CARES ACT makes technical ammendments to TCJA to change the depreciable life of a QIP from 39 to 15 years made by the taxpayer professional to qualified improvement property and enables businesses to write of costs associated with such property. The CARES ACT provides that QIP has a recovery period of 15 years, making it eligible for bonus depretiation. This correction is effective retroactively to taxable years beginning in or after 2018.
The Tax Reform repealed the corporate alternative minimum tax (ATM) and provided an opportunity for corporations to claim a refund of minimux tax credit carryovers during 2018 through 2021. The CARES Act makes the remaining minimum tax credit carryovers fully refundable in 2019. Corporations also have a choice to claim a refund for the unused carryovers for 2018.
The CARES Act expands the Small Business Act to create small business pause loan program to make loans to business, public, private, and non-profit. Loan amounts are determined based on four months of payroll, rent, mortgage, payroll not to exceed $10,000,000. Loans received before the end of June may be eligible to have the loan forgiven in an amount equal to maintaining the cost of payroll from March through June.
According to a study conducted by WalletHub.
- There are tax benefits for companies who want to do business in Texas.
- Promotes and embraces innovation and technology.
- The state doesn’t have a corporate or personal income tax.
- Texas has friendly business atmosphere for small businesses.
- Advanced tech, energy, and manufacturing industry Petroleum refining.
- Aerospace, aviation, and defense.
Here’s a list of businesses operating:
- Retail stores, restaurants, movie theaters, and malls opened its doors on May 1st. operating at 25% capacity.
- Museums and libraries are open at 25% capacity.
- Sole propietors can safely return to work.
- Churches are allowed to stay open and expand their occupancy to 50% on May 18th.
- Hair salons, bars, and gyms are to open tentatively in mid-May.
THANK YOU FOR SUBSCRIBING TO OUR NEWSLETTER MABETAX MAY 2020
MABE International Advisors, Inc.
11511 Katy Fwy Suite # 640
Houston, TX 77079
Tel. 281-741-3691
Monday-Friday 9 AM – 5 PM
OFFICES MEXICO
Tampico, Tamps
Loma Azul 207
Col. Lomas de Rosales
Tampico, Tamps., México
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Querétaro, México
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Monterrey, NL
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Monterrey, Nuevo León, México
Tel: +52 (81) 2317.48.80
