As I mentioned earlier, companies that have been granted a Paycheck Protection Program (PPP) loan are not income for federal income tax purposes and you are allowed to deduct the business expenses you paid with the PPP funds .
When filing tax returns in North Carolina, the PPP loan relief funds are not considered income. However, you will not be able to deduct the business expenses paid from these PPP funds, so this is an adjustment that needs to be made on the North Carolina tax return.
For those who have received a PPP loan, it is important to remember to ask for forgiveness, otherwise these PPP loans will be turned into loans that you will have to repay. There are different deadlines for this grace period. So, if you haven’t already, contact the person who helped you acquire the PPP funds now – for many of you, this will be your local banker.
At the time of this writing, North Carolina appears to be in the process of changing its law on PPP loans. For now, it appears to be staying the same as it was at the beginning of this year, which means it is an addition to North Carolina tax returns – not “forgiven” as it was at the federal level.
For 2020, there was a change to the tax law to exclude $ 10,200 per person unemployment on the 2020 federal tax return as long as the income was $ 150,000 or less. This is another change that North Carolina lawmakers are still working on, and it seems this will stay the same, which was an addition to North Carolina tax filings.
If the child tax credit changes for the 2021 federal returns, there will be a monthly prepayment which will be $ 250 per month (under 18) or $ 300 per month (under 6) as of July. For children under the age of 18 (instead of 17 under previous tax laws), the credit is $ 3,000 per qualifying child, not $ 2,000 under previous tax laws. For an Eligible Child under 6 years of age, the credit is $ 3,600. This credit increase will be reduced if the taxpayer’s income exceeds $ 150,000 for joint declarations by spouses, $ 112,500 for household submissions, and $ 75,000 for separate declarations by spouses.
You can go to irs.gov, search for “Answers to extended child tax deduction” and find the option to opt out or opt out of receiving monthly payments. You may prefer to receive the lump sum as you have in the past when filing your tax return. If so, now is the time to take care of it.
The IRS has sent out letters informing taxpayers of this change and options that have historically qualified for the child tax credit. If you don’t receive a letter, you can still go to irs.gov to check your options there.
There is a change in the expenses for business lunches, restaurants, only for the years 2021 and 2022 to 100 percent deductibility. This does not apply to meals made from prepackaged foods such as those offered in grocery stores, grocery stores, drug stores, kiosks, vending machines or other such shops or in catering facilities operated by the employer.
Remember, during these challenging times, please keep supporting your local restaurants and other small businesses. Stay safe and healthy
The information in this article is general in nature and should not be drawn up without first examining whether it is applicable to your situation.
Mary Currie is a certified public accountant practicing in Rocky Mount.