SBA Debt Relief for small business owners

by Mounica Kota | Oct 9, 2020 | Blog, income tax, IRS, Tax Deduction, tax filing, Tax Payers, Tax Refund, tax return, Taxtips

SBA Debt Relief for small business owners

The pandemic COVID-19 has created a lot of financial problems for people across the country. People from every profession are facing several economic issues due to the coronavirus and are continuously struggling to lower the impact of the pandemic on the profession/work-related front. However, if you are a small business owner then your business must have been impacted badly by the spread of the COVID-19. So, one of the ways by which you can be able to obtain some financial aid during these challenging times is through the US Small Business Administration (SBA) Debt Relief Program.

SBA Debt Relief Program

The SBA is a part of the $2 trillion packages offered by the US Government under the provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act. It can be described as a debt-payment assistance program that would help in providing immediate relief to the various small businesses in the United States with the help of Small Business Administration Loans.

By the SBA Debt Relief Program, financial assistance can be provided to small business owners by making a payment of principal, interest, and any other fees which the borrowers owe for the current 7(a) loans, 504 loans, and other Microloans as well.

How to participate in the SBA Debt Relief Program?

If a business is eligible to participate in the SBA Debt Relief Program there is no need for any application. Participation is automatic. The SBA has given instructions to the different lenders for not collecting any loan amount during the debt relief period. The SBA has said that it would make the loan payments for these borrowers. According to the provisions of the CARES Act, the SBA should start making the payments within a month of the date on which the first payment of the loan taken needs to be done.

In case the loan payment of a borrower was to be collected after 27^th March 2020, then the lenders were provided with the instruction to inform the borrower about having the option of loan payment returned or applying the payment for even more reduction in the loan balance after the payment has been made by the SBA.
If the loans are not deferred then the SBA can start making the payments on the due date of the next payment and will be making the payments for 6 months.
For those loans which are on deferment, the SBA will be making the payments with the immediate next payments that are due after the end of the deferment period. The SBA will be making the payments for the upcoming 6 months.
In the case of those loans which have been made after 27^th March 2020 and have been fully disbursed before 27^th September 2020, the SBA will make the payments. The SBA will start with the first payment which is due and would do the payments for the upcoming 6 months.

Can the SBA Debt relief program be applied to PPP and EIDL loans?

The Debt Relief Program by the SBA does not apply to the Paycheck Protection Program (PPP) loans to or to the Economic Injury Disaster Loan (EIDL).
EDILs which have the status of regular servicing which means when the loan is in a closed state with accordance to the Terms and Conditions of the loan authorization, the payment for the final disbursement has been made and the SBA guarantee fee has also been paid as of 1^st March 2020, automatic deferments would be provided by the SBA through 31^st December 2020.
However, interests would keep on accruing during this period.

Can you get a PPP loan even if you have received the SBA debt relief?

Yes, even if you have received the SBA Debt Relief you can fill an application for obtaining the PPP loan. You must keep in mind that the procedure for obtaining a PPP loan is different from that of the process for obtaining the SBA Debt Relief.

Conclusion

So, the SBA Debt Relief is an excellent initiative by the Government to alleviate the distress caused to the economic condition of the small businesses within the country due to the pandemic COVID-19. The borrowers might have several queries related to the SBA debt relief program and must contact their lenders for this purpose.

The top 10 FAQs answered for taxpayers in the US-2020.

by Mounica Kota | Oct 4, 2020 | Tax Payers, Tax Planning, Tax Preparation, Tax Refund, Taxtips

The top 10 FAQs answered for taxpayers

in the US-2020.

There have been various changes in the tax laws due to the outbreak of the pandemic COVID-19. Due to the adverse impacts of the pandemic, millions of Americans have become unemployed and are facing a huge financial crisis. To alleviate the situation of economic distress which is being faced by the Americans the IRS has introduced various changes into the tax laws for the year 2020.

The major change which was announced by the IRS was the postponement of the due date for filing federal income tax returns and for making the payment of the Federal Income tax. This due date was on 15^th April 2020 which was postponed to 15^th July 2020. Moreover, there would be no accrual of any interest or no penalties for failure in payment of taxes or failure of tax return filing by 15^th April 2020. The interest accrual and penalties will begin after 15^th July 2020. This relief has been made available for all types of taxpayers such as individuals, an estate, a trust, a corporation, or any business entity.

Now, since there have been such important tax reforms introduced by the IRS there must be several queries in the minds of the taxpayers. So, let us have a look at some of the major queries of the taxpayers related to the reforms in the tax laws.

What do I need to do to avail of the extension of tax return filing due date from 15^th April 2020 to 15^th July 2020?

No, you do not have to do anything to avail of the extension of the tax return filing due date to 15^th July 2020. You will not have to file any additional forms or contact the IRS to avail of this relief in the tax filing deadlines. If you have to pay any taxes that are due, you can do that by 15^th July 2020. After 15^th July 2020, if you need a further extension then you would have to file a request for an automatic extension.

Is there a need to be sick, quarantined, or have any impact from COVID-19 to qualify for this relief?

No, you do not have to be sick, quarantined, or impacted by the COVID-19 in any form to avail of this tax relief introduced by the IRS.

How and by when do I need to make the payment for my first and second quarter Estimated Income Taxes 2020?

The due date for the first quarter and second quarter Estimated Income Taxes was on 15^th April 2020 and 15^th June 2020. However, you can make both the payments by 15^th July 2020. You can do this in the form of a single payment with an amount that is adequate for covering both the first and second quarter Estimated Income Taxes 2020.

What would be the due date for the rolling over of the entire or a portion of a qualified plan loan offset into a retirement plan?

If you are filing your Federal tax returns by 15^th July 2020, then the due date to roll over a part of a complete qualified plan loan offset into an eligible retirement plan is by 15^th October 2020.

I had made an excess contribution to my IRA during the year 2019. Is it feasible to avoid the excise tax if I withdraw the excess amount by 15^th July 2020?

Yes, you can avoid excise tax if you withdrew the excess amount contributed by 15^th July 2020. But, you must not have taken any deduction for the excess contribution which you have done. Moreover, you can even avoid the excise tax if you withdrew the excess amount not only by 15^th July 2020 but also by 15^th October 2020.

Are the tax return filing and payment deadline for exempt organizations, businesses, or any other entities which have the due dates for filing on 15^th May 2020 or 15^th June 2020 have been extended?

All the tax return filings and payments related to the Federal taxes which are from 1^st April 2020 till 1^st July 2020 have been postponed to 15^th July 2020.

I wanted to file a claim for my Tax Refunds for the year 2016. This has to be done by 15^th April 2020. Do the tax relief laws allow this claim to be done later?

Yes, with the changes in tax laws you can file your claim for obtaining tax refunds for the year 2016 by 15^th July 2020.

What do I need to do in case I have filed for an automatic extension for filing the 2019 tax returns? I owe Federal taxes to the IRS.

You can file your tax returns by 15^th October 2020; but, you will have to pay your taxes by 15^th July 2020.

Has the IRS postponed the tax return filing deadlines for partnership firms and S-corporations which were due on 16^th March 2020?

No, there has been no postponement by the IRS for the tax return filing deadlines for the partnership firms and S-corporations that were due on 16^th March 2020. This tax relief is only for filings and payments which are after 15^th April 2020 and before 15^th July 2020.

Does this relief give me more time to contribute to my IRA, HSA, and Archer MSA?

Yes, you can make contributions to your IRA, HSA, and Archer MSA at any time in a year or by the tax return filing due date.

Hence, these common FAQs on the tax payments related to 2020 will resolve your queries related to the tax return filing and tax payments.

Most Important Year-End Tips To Increase Your Tax Refunds

by Mounica Kota | Nov 15, 2019 | income tax, Investment & Income, tax deductions, tax filing, Tax Liabilities, Tax Planning, Tax Refund, tax savings, taxes, Taxtips

Most Important Year-End Tips To Increase Your Tax Refunds

A quick look at the calendar and you will realize, this year has come to an end. And even before you realize, the tax season will be close. Instead of rushing during that time, you can take a few simple steps this holiday season to reduce your tax liabilities and increase your tax refunds. Most Important Year-End Tips To Increase Your Tax Refunds.

1.Retirement Planning

Planning for your retirement is a great way to add funds for your retirement and make handsome savings in the form of taxes for the current financial year. You can take the help of either traditional IRA or 401(k) to contribute to your retirement planning. Self-employed individuals can save up to 25% of their income under SEP IRA up to a maximum of $56,000 for the current year.

2.Upskilling

If you have been planning to take some classes to improve your skillset, this might be the best time to enroll. You can start with enrollment and make the payments for the next quarter by the 31^st of December. This will help you get some valuable tax credits of up to $2,000 with the help of Lifetime Learning Credit.

3.FSA

Taxpayers who have FSA or Flexible Spending Account, it might be the right time to give your doctor a visit. While there is no hard and fast rule to use the FSA amount but there might not be a lot of benefits in keeping the amount as well. You can only carry forward $500 to the next year. The FSA plans usually allow subscribers to use these funds for up to 2 and a half months in the next year.

4.Charitable Donations

You can make this holiday season a little bit better for the people who are in need. If there are any unused household items or clothes, you can donate them to the less fortunate. Such donations can help you reduce your tax liability, provided you donate to qualified charitable organizations and if you itemize the items. Alternatively, if you volunteer for charitable organizations, you can claim the miles that you drove at 14 cents for each mile driven.

5.Shuffle your Investments

Some investments in your portfolio might not have performed as you expected them to. Investments that have gone down in their value can help you reduce your tax liabilities. You can use the loss to offset the gains that you have received from other investments. However, you must sell the loss-making investments to offset them with the profit-making ones. Should your losses exceed the profits, you can use up to $3,000 against your income.

6.Defer Any bonuses

Taxpayers expecting a year-end bonus for the hard work that they have put in, might find themselves in a spot. The bonus might push you to another tax bracket or increase your tax liability by a healthy margin. If you can, do speak with your boss to deter the bonus to January of next year. This way, you won’t have to taxes for the bonus in the current year.

7.Other Dependent Credit

Taxpayers supporting their grandparents or parents, or other loved ones can benefit from Other Dependent Credit. If they qualify to be non-child dependents, you can claim the Other Dependent Credit. You can claim up to $500 under this category and receive dollar by dollar reduction in your taxes.This tax credit is relatively new and not many taxpayers use it.

Each dollar that you save is a dollar that you earn. Using the above methods, you can save takes on your income and boost your tax returns as well.

Top #5 Tax Tips For NRI’s Working As Personal Trainers In The US

by Mounica Kota | Nov 9, 2019 | Tax Planning, Tax Preparation, Tax Refund, tax savings, taxes, Taxtips

Top #5 Tax Tips For NRI’s Working As Personal Trainers In The US

Being self-employed brings a lot to the table. From having the freedom to choose your work timings to create a business on your own. Though there are a few challenges, the positives far outweigh the negatives. And it gets even better if you happen to be a personal trainer as you get a chance to help people stay fit. However, being self-employed also means that you have to handle your taxes on your own. Here are top 5 tax tips for NRIs working as Personal Trainers.

Setting Up Costs

If you just started as a personal trainer in the country, the chances are high you would have spent a considerable amount of money on creating a website, advertisements, marketing, figuring out business location, etc. You can deduct these expenses from your taxes.

Cost of Procuring Equipment

The IRS allows deductions for work related equipment. For any fitness equipment that you have purchased or any training related tools, you can get a healthy tax break on the same. For instance, if you buy any equipment that your clients will be using, you can claim the expenses for a tax break. And the location of the equipment used doesn’t matter much. Meaning, clients can use the equipment or tools in your place, their place, your studio, etc. The only verifying parameter is that the equipment must be used for business.

Educational and Training Materials

Educational and training materials offer dual benefits. For starters, you can claim for any educational or training expenses for your clients as well as for yourself. One of the prime examples is that if you undergo any training or educational courses to enhance your skillset, you can claim the amount as deductions. Similarly, if you have any apps or training videos that your clients use, you can claim those as deductions as well.

Travel Expenses

There is a very good possibility that you must travel to meet with your clients. As a self-employed individual, you can claim these expenses as well. You can claim a deduction of 58 cents per mile that you drive. If you drive to your client’s place for a training session, you can claim this amount. Though it might not seem a lot at first, if you keep driving to the client’s place regularly, it can add up to be a considerable expense. The IRS even allows deductions under the pretext of depreciation of the vehicle, if you use your vehicle to drive to client’s place.

If you must fly to any client’s place, you can claim the flight expenses along with any hotel accommodation. The IRS even allows you to deduct up to 50% of the meals that you consume on such trips.

Business Expenses

There are some generic business-related expenses that are common to everyone. If you have a dedicated phone line to interact with clients or take calls from potential clients, you can claim the bills. If you have to acquire a state license for your personal training classes, you can claim them as deductions as well. Similarly, you can utilize any expenses related to the bookkeeping of your business or tax preparation for a tax break.

If you are using your primary bank account for business, any changes that you pay to the bank for the account is also tax-deductible.

Health Insurance

Any contributions that you make towards health insurance plans or retirement plans for your future are also tax deductible. One of the benefits of being self-employed is that you can even deduct your premiums paid for health insurance.

Knowing everything about taxes and especially the ones pertaining to your occupation is important to be able to plan taxes and reduce liability.

How to Become a Financially Literate NRI in the US?

by Mounica Kota | Sep 13, 2019 | income tax, tax savings, taxes, Taxtips

How to Become a Financially Literate NRI in the US?

To become financially literate NRI means to be able to manage your money efficiently. It is basically the ability to clearly understand the concept of how money is made, how it is managed and invested, how it is spent economically. Precisely, financial literacy is the skill which lets you utilize your money efficiently and utilization of your money in accomplishing your long term financial goals.

Financial literacy is not a subject that is included in your school or college syllabus; rather it is a clear understanding of your personal debit and credit. This will need constant attention to your expenses and an urge to always sideline your income and expenses together.

Major components of Financial Literacy

The major five components which you can associate with financial literacy are mentioned below.

Basics on Budgeting

Creating a budget and maintaining that budget is an important concept of financial literacy. Without a proper budget, you will never be able to understand the whereabouts of where your money is coming and where it is being spent and you will end up in a financial crisis.

Interest and its impact

It is an important concept and needs to be understood as it affects your finances in an intensive manner. This will help you in saving and also better utilization of your money.

The habit of saving

For maintaining a healthy and stable financial life, saving is very important. This will inculcate the skill of looking towards accomplishing long-term goals in the future and planning present actions accordingly.

Debit and credit

Proper knowledge about debit and credit is needed to be able to handle finances diligently.

Beware of financial frauds

With the widespread use of technology in financial spheres like internet banking, online shopping, electronic fund transfer; your financial data is more prone to risks and should be protected.

When you are residing in a different country, you should have the basic financial literacy related to the financial sphere of that particular country. This will be helpful for you in utilizing your money, saving money and also investing in some useful avenues.

Tips to be a financially literate NRI in the US

Reconciliation of bank accounts regularly

You should make it a habit of going through your bank statement every month when they are sent to you by the bank. By this, you will know in detail about your income, spending and any diversion in a saving plan if you have one.

Utilization of financial tools

There are a large number of financial tools and applications which can help you understand the confusion associated with dollars. You can get to know in details about the income, debit, credit, etc. Moreover, financial tools will give you tips and suggestions on financial planning for improving your financial literacy.

Take online courses

There are numerous professional courses and sessions available online. You can enroll in these sessions and increase your knowledge of finances, NRI taxation policies, NRI tax saving methods, etc.

Make friends

You can join your friends from the US so as to increase your exposure. This will help you in understanding the various financial implications in the country, ways how money is utilized or saved in the US, taxation rules in the US, etc. With the help of online tools, you can have educational gatherings among friends where you can discuss finances and financial goals.

Be vigilant and aware

Since you are in at a new and unknown place now, you should be vigilant about your finances and security related to financial information. You can read books, visit libraries, watch online videos on finances, financial security and financial goals.

Hence, initially, you would definitely find certain differences and difficulties in understanding about finances at a new place. But you can start understanding the methods, rules and, laws gradually. As an NRI, it is quite necessary for you to understand the finances of the US so that you tend to save a good amount or invest in good avenues.

Annual Gift Tax Limitations

by Mounica Kota | Jan 23, 2019 | tax limitations, Tax Payers, tax savings, Taxtips

Sec. 529 plan is tax-free accumulation, so the sooner the account is established and funded, the better. A special provision of Sec. 529 allows those who are concerned with the annual gift tax limitations, currently $15,000, to contribute five years’ worth of contributions ($75,000) up front. These limitations apply to each contributor, but if there are multiple contributors, such as parents, grandparents, aunts and uncles, huge amounts can be contributed up front and provide the greatest long-term growth. While it is no secret that resident Indians have to pay taxes for a fiscal year. However, all NRI investors must also pay taxes for a fiscal year if applicable. Irrespective of whether they earned the money directly or indirectly, if they are liable, they must pay taxes on the same. As long as the income is generated in India. Any income that is generated as a part of their investments or assets or business interests, is liable to taxes. The presence of tax laws means that there are different avenues to save money from tax liabilities as well. If you are an NRI and are looking for tax-related tips, here are some that you might find to be quite useful.

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