Tax Day Is Extended to May 17th: Here’s What You Need to Know

Tax Day Deadline
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In mid-March, the Internal Revenue Service (IRS) and the Treasury Department announced that the federal income tax filing deadline for individuals would be extended past April 15th to a new deadline of May 17th. The 2021 tax deadline extension was proposed to provide relief for taxpayers during the difficult economic circumstances spurred by the pandemic. With all of these sporadic changes and heightened difficulties, many individuals still have questions regarding their tax filings.


SD Associates is a full-service CPA and business advisory firm that provides expert tax planning services for individuals and businesses alike. We’re here to help answer all your questions regarding the 2021 tax deadline extension and provide expert insight on how you can file correctly. Below, we’ve answered some common questions or concerns regarding this unusual tax season. 


When Can I File 2020 Taxes in 2021

Individual taxpayers are traditionally required to file their tax payments on April 15th of each year. Unprecedented circumstances this year, however, have prompted the IRS to provide an extension to help ease the burden of a challenging economic climate. 2020 taxes should now be filed before the deadline of May 17, 2021. Regardless of the amount owed, individual taxpayers can avoid any interests, penalties, or related fees associated with delayed payments by filing before this deadline. 


If you’re an individual taxpayer who requires further time beyond this new deadline, you are still able to request an additional extension to October 15, 2021, through your tax professional or online software services. This grants taxpayers more time and flexibility in filing their 2020 taxes, but it does not provide any leeway in paying taxes that are due. 


How to File 2020 Taxes? 

Now that you know when you can file 2020 taxes in 2021, you may still be wondering how the actual procedure of filing has changed. The first thing to note is that this new extension will be processed automatically. In other words, you will not need to file any additional forms or contact the IRS to qualify or update your tax standings. There should similarly be no real difference in the physical filing this year, other than the fact that you may be entitled to certain benefits or refunds. The IRS suggests that filing electronically with direct deposit is the most efficient and quickest way to secure these refunds and receive the stimulus payments that you’re potentially entitled to. Despite the extension, the IRS continues to urge individual taxpayers to file as soon as they possibly can to avoid further miscommunication or tax filing penalties. 


Tax Partners You Can Rely On 

In navigating the complex tax world, it can become increasingly difficult and overwhelming to stay up-to-date and knowledgeable on all the new updates or tax regulations. SD Associates has provided personalized tax services for individuals and businesses for nearly 40 years. We go beyond traditional tax advice to truly create long-lasting and meaningful partnerships with clients. If you’re looking for the “best tax services near me”, look no further than SD! 


New Child Tax Credit Rules: What to Know

child tax credit - what to know
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President Biden signed into law his first legislative act related to the COVID-19 crisis.  The  American Rescue Act of 2021 (ARPA) included an expanded 2021 child tax credit, aimed to help families with children endure the impacts of the COVID-19 pandemic. The Child Tax Credit, alongside a Recovery Rebate Credit (third stimulus) and several other kid-focused tax credits, can significantly reduce your tax bill this season if you meet the requirements imposed. The professionals at SD Associates are sharing everything you need to know about the new tax credit and how it may affect your family. 


How Much You Get Per Child

Under the American Rescue Act, more money will be given to more families. The new 2021 child tax credit is a refundable tax credit that provides parents with up to $3,600 per qualifying child under 18. Parents who have children aged 6 to 17 will be provided with a $3,000 credit and those with children under the age of 6 will receive $3,600. This is up from $2,000 per dependent child up to age 16. The credit if fully refundable meaning low-income families who weren’t eligible for the previous benefits will now be eligible to receive the 2021 child tax credit.


The credit will be split; half will be paid through the tax refund and the other half will be paid in advance throughout the year, with payments ranging from $250 or $300 between the months of July and December. Families who are eligible will be required to claim the remainder of the credit on their 2021 tax return next April. It’s also important to note the child credit income limit. The credit begins to phase out when Adjusted Gross Income (AGI) reaches $75,000 for single filers, $150,000 for joint filers and $112,500 for head of household filers. High-earning families will still be eligible for the old $2,000 credit, which begins to phase out when AGI exceeds $200,000 for single filers and $400,000 for joint filers.


Who Qualifies for the 2021 Child Tax Credit?

Some other child-related eligibility requirements for the child tax credit include:

  •   You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; the IRS has the details here).
  •   The child cannot file a joint tax return (or file it only to claim a refund).
  • To take the Child Tax Credit for the 2020 tax year, the child has to be 16 or younger on December 31, 2020. To take the Child Tax Credit for the 2021 tax year, the child has to be 17 or younger on December 31, 2021.
  • Family income – the child credit income limit phases out at certain thresholds. The phase out threshold was $75,000 for single filers, $112,500 for head of household, and $150,000 for joint filers. For 2020 tax year $400,000 for married filing jointly, and $200,000 for everyone else.


New Child and Dependent Care Tax Credit Changes

For the 2021 tax year, the Child and Dependent Care Credit can get you up to 50% of up to $8,000 (up from $3,000 in 2020) of child care and similar costs for a child under 13, a spouse or parent who cannot care for themselves, or another dependent so that you can work and up to $16,000 of expenses for two or more dependents (up from $6,000 in 2020). This is a refundable credit.


If you’re looking for reliable tax services , look no further than the experts at SD Associates. We work closely with our clients to deliver cost-effective solutions and value-added services whether it is in accounting, auditing, consulting, or tax engagement. Connect with our team of professionals today to have all your tax questions answered.

Resolve to Practice Better Business Habits…and Live Longer?

A recent study found that the wealthiest among us add, on average, want an extra nine happy and healthy years to their lifespan. This is comparable to quitting smoking and more than if you decided to start hitting the gym five times a week. So what New Year’s resolutions are you setting in place?  Forget about the gym, diet, and Nicorette and focus on practicing business habits that can help you maximize profits. Whether you are starting off with a new business venture or looking to make improvements within your already established company you need an advisor with a proven track record to assist you.

Here are four basic tips to help you save time and money.  Of course, every business and business owner are unique so please do yourself a favor and let SD Associates help guide you toward wealth and potentially a longer life. 

Keep Business Finances in a Separate Account
One of the first things you can do to set yourself up for success is to separate your business and personal spending. This requires opening a separate account to track all your business expenses. Having a dedicated business account will save you time and money in the long run. At SD Associates, our accounting and bookkeeping services will allow you more time to focus on the important aspects of your business, while we take care of the financial aspects.

Establish Clear Payment Terms
Successful companies have strong, open lines of communication with their clients. Establishing clear payment terms from the start can help you and your company avoid late payments and cash crunches. Get paid faster with solidified invoice payment terms. Clearly state accepted forms of payment, due dates and late-payment penalties from the get-go. Don’t be afraid to send out reminders and follow-ups.

Budget for Emergency Expenses
There’s no such thing as being overly prepared. Putting a portion of your profit aside or building space within your budget can save you in case of an emergency. Whether unforeseen office renovations arise, or immediate work equipment replacements are needed, having the extra funds set aside for these situations can help you get back on your feet. Keep at least six months to a year’s savings put aside for these situations— it will make all the difference.

Work with a Professional
Connecting with professionals in the field of accounting will give you a greater insight into your current business standings and what your next steps to success should look like. A professional accountant or bookkeeper can keep your records and books up to date and make you aware of any loopholes, potential fees or additional tax deductions that you might be eligible for. The accounting services offered by SD Associates will give you more time to focus on the forefront of your company rather than stressing over the behind-the-scenes finances.

Set time aside to meet with a trained and experienced CPA for a better tomorrow for your small business. Contact us today to start saving money now to make your new year the best one yet.

Fall Tax Tips for the Small Business Owners

Whether your small business has a great fall season or slows down, thinking about tax preparation probably falls to the bottom of your to-do list faster than the leaves fall to the ground. But this new season means that the holidays will come and go, winter will be over and tax season will be here once again before you know it. Rather than putting your tax preparation off until the new year. There are some easy tax tips for small business owners that will make tax season much easier.

Create a Checklist

Leaving something out or having an error on your tax return can cause your small business to lose money and may result in you losing precious time. To avoid this, it’s best to write out or type up a list of all the items that are important for filing your business’s taxes. This will include, but is not limited to, the following:

  • Filing payroll forms
  • Submitting 1099 forms to certain employees
  • Putting together income and expense records
  • Collecting expense records

Get Everything Organized

Almost every business owner has dealt with the stress of taking care of business taxes at the last minute of tax season, but there’s no need to put this additional stress on your already full plate. Instead, now is the time to prepare yourself tax filing—you can do this by making sure your bookkeeping is up-to-date, putting all of your tax-related documents in the same place and organizing the receipts that have accrued over the course of the year. In addition making sure your accounting software is up to date including all bank reconciliations have been done timely.

Be Aware of Deductions Eligibility

Far too often, small business owners miss out on tax deduction opportunities, meaning they also miss out on the opportunity to put more money into their pockets. The following is a list of popular small business tax deductions that may apply to yours:

  • Expenses for your home office
  • Costs from starting up your business
  • Office supplies
  • Office furniture
  • Office equipment (may include cell phones used for business)
  • Mileage from transportation to job sites, client visits, etc.
  • Costs from business trips (flights, car rental, meals, etc.)

If you are unsure of which tax deductions your small business is applicable for, now is the time to contact a tax services professional.

Handle Things Early to Maximize Deductions

By “things” we mean spending more money throughout the fall to help maximize your deductions. If your small business is financially stable, then you may want to consider taking care of the following expenses prior to December 31, 2019:

  • Paying vendors
  • Paying advertisers
  • Leasing a vehicle
  • All employee bonuses paid before year end
  • Purchasing new equipment

Although all of these options will cost you, it will make a big difference in your tax refund (in a positive way).

Whether you need assistance with tax preparation by getting your bookkeeping in order, or you need the help of a tax services professional, the team at SD Associates in Elkins Park, PA is here for you. Contact us today to schedule your appointment!

7 Signs You Should Invest in a Bookkeeping Service

invest in bookkeeping servicesAs a small business owner, you probably wear many hats within your business. You may be preparing invoices one day and dealing with the bank the next. As an entrepreneur, it only makes sense that you want to keep a watchful eye on all the activities of your business. In the beginning, this can be quite resourceful and can help minimize costs. However, over time, this can lead to deeper problems for your company. One of the main culprits, is poor bookkeeping services. When it comes to, it’s best to leave this job to the professionals. Whether you’re looking for long-term success, internal growth, or a more sustained profit, the experts at SD Associates are sharing why bookkeepers are essential and eight signs you should invest in a bookkeeping service.


Books are outdated

Your company’s general ledger should always be kept up to date. Outdated books and records can equal bad news for your business. You’ll have trouble understanding your cash flow needs and as well as not maintaining a firm handle on your finances. So, if you have paperwork scattered across your dinner table and shoeboxes filled with untracked receipts, it’s time to call in a professional to help you better keep track of your business transactions.


Set of books has never been maintained before

You’re an entrepreneur, which probably means you may have not gone to school for finance, and that’s okay! While you may prefer to handle most aspects of your business yourself, if you’ve never tackled bookkeeping before, now is not the time to start. Running a business and trying to learn a whole new field of study can cause some major bumps in the road that will end up costing you more than it saves you.


Just too busy

As your business grows, so does your list of responsibilities. Your DIY approach to your bookkeeping will begin to become unsuitable. If you can’t find the time to get everything done, it’s time to reprioritize and outsource your bookkeeping services to help your business continue to grow.


Bills are being paid late

With the paperwork piling up and your lack of time, bills are bound to fall through the cracks. Late payments not only make you look unprofessional, but it can also tarnish your business’s reputation. Professional bookkeeping services include proper time management to ensure you never miss a beat (or a bill).


Missed out on tax deductions

Just as bills can fall through the cracks, so can tax deductions. Employing a professional bookkeeper can make sure your many business expenses such as digital downloads, phone bills, and online subscriptions never go undocumented. These deductibles can be used to offset the total income owned come tax time each year.


Unpredictable cash flow

Have you ever scrambled at the end of the month to cover your expenses due to a lack of cash? While this can happen because of several different scenarios, the bottom line is you have a cash flow problem. When you hire a professional to perform your bookkeeping services, they can track your accounts payable and receivable, ensuring you are always on top of your cash flow needs.


Bookkeeping software being used as a replacement

You should never completely replace your general ledger with a bookkeeping software service. While smart tools like QuickBooks can make your process more efficient and streamlined, a computer program can never substitute for a true professional.


If you’re ready to grow your business, increase profits, and streamline productivity, it’s time to consider hiring a professional bookkeeper. As your business grows, your DIY approach to managing your finances will become counterproductive. At SD Associates, we can assist you in managing your books and day-to-day financial transactions, so you have more time to make sound business decisions without the added stress of bookkeeping. Call us today at (215) 517-5600 or contact us here.


4 Important Things to Know Before the July 15th Tax Deadline

July 15th Tax DeadlineAs part of the CARES Act enacted earlier in the year, the April 15th Tax deadline has been pushed back to July 15th. Unfortunately, there’s more to the story than just pushing the deadline back three months. For some people, this actuality might not make much of a difference in their day to day lives, but for others, July 15th could be a financial nightmare. As with most years, taxpayers who are unable to file this year’s deadline can file a request for extension to October 15, 2020. Understandably, the deadline to file the request itself was moved to July 15. It should be noted that the extension to October 15th is only an extension to file and does not extend the time to pay federal or state income taxes beyond July 15, 2020. The CPA’s at SD Associates are here to help you with tax preparation and are sharing four important things you should know before the July 15th tax deadline.


Everything That’s Due on July 15th

In addition to postponing Tax Deadline, the IRS also postponed the first two 2020 quarterly estimated tax payments. The first two 2020 quarterly payments are normally due by April 15th and June 15th. These were both extended to July 15th as well. These payments affect independent contractors and other self-employed individuals. Because of the postponement, it’s possible that these individuals may owe half of their estimated taxes in addition to any taxes owed from their 2019 tax return. This could be a disaster for individuals who have been affected by the economic shutdown or hardships due to the pandemic.


How to Avoid the Penalty

Anyone with taxable income is required to pay estimated taxes, even if you’re an independent contractor, self-employed or a retiree. Individuals who are self-employed or are a contractor are required to pay quarterly taxes in April, June, September, and January. To avoid IRS penalties, you must owe less than $1,000 in taxes for the year and pay at least 90% of taxes owed in 2020 or 100% of taxes you paid for in 2019, whichever amount is smaller. If you don’t pay enough, IRS Form 2210 can help you see how much you owe in penalties for underpaying. It’s too early to know whether the penalties will be waived, or the safe-harbor percentages will be lowered in 2020, but sources are suggesting it will “probably be considered.”


Stimulus Payments and the PPP Loan Program

What is required to file taxes in 2020? Stimulus checks, loans from the PPP and unemployment benefits will all need to be considered when compiling required documents, which could contribute to further complications. For individuals who received the COVID-19 stimulus check, many wonder if this payment will be treated as taxable income. If so, it needs to be considered for estimated taxes. While the IRS has stated that “the payment is not included in gross income and, therefore, taxpayers will not pay tax on it,” you will still need to report it when you file your 2020 tax return. Experts are advising that it shouldn’t affect the amount of taxes owed or the amount you receive from your refund next year.


As for small businesses who received funding from the Payment Protection Program, you may be wondering what is required to file taxes for your business in 2020. In Notice 2020-32, provided by the IRS, no tax deductions are permitted for expenses that are funded by the PPP loan. This can affect the estimated tax calculation for individuals who pass their income through an S Corporation, LLC, or sole proprietorship. This means that your 2020 taxable income could be potentially higher.


Unemployment Benefits

Unemployment claims have surpassed 40 million since the start of the pandemic. If you are one of the millions of individuals who have filed for benefits, chances are this is the first time in your life you’ve ever had to do so. You’re not alone, and some confusion has arisen about the tax treatment. Unemployment benefits are taxable by the IRS and states that have income tax. Because of this, you will need to make estimated-tax payments on this income unless you have elected to have federal income taxes withheld using Form W-4V.


Our environment is ever changing in the wake of COVID-19. At SD Associates, we want you to know that we are here for you, providing everything you need to file your taxes this year. From consultation services to our helpful tax preparation services, we will be here with you every step of the way if you need help navigating these uncertain waters. Call us today (215) 517-5600 or contact us here.

Round Two of Payment Protection Program: Here’s What You Need to Know

How To Apply For Small Business Loan Corona Virus
Sticky Note With Handwritten “Apply”

Small businesses across the United States have all been impacted in some way by coronavirus (COVID-19) pandemic. Forced closures, reduced hours and layoffs have affected employees and employers everywhere. In an attempt to provide some relief and help for small businesses. The CARES Act was enacted to provide much needed help to individuals, business and others in response the economic distress. One of the programs, is called the Paycheck Protection Program. The loan program will allow businesses suffering due to the coronavirus outbreak to borrow money for a variety of qualified costs related to employee compensation and benefits. The CARES Act calls for a portion of the above-mentioned paycheck protection loans to be forgiven on a tax-free basis.

The initial round, in late March 2020 of funding, provided nearly $350 billion guaranteed paycheck protection loans for small businesses. However, these funds ran out extremely quickly. With a passage of the paycheck protection program and health care enhancement act which was recently signed provides additional relief by providing an additional $310 billion more in funding. Here’s additional information you need to know about the second funding of the coronavirus relief loans for small businesses.

Assistance for Smaller Businesses
Of the $310 billion, $60 billion will be specifically set aside for smaller banks and credit unions. The law also expands the Economic Injury Disaster Loan (EIDL) program by $60 billion: $10 billion for grants and $50 billion for loans. This is welcome news for businesses that desperately need funding to weather the economic uncertainty created by the COVID-19 pandemic. The legislation greatly expands the number of businesses, including individuals who operate as a sole proprietor, or independent contractor (including non-profits). Each business can qualify for a loan to pay employees and other payroll costs and cover other non-payroll expenses like mortgage interest, rent and lease payments as well as utilities. All loans granted will have a 1% fixed interest rate and will be 100% forgiven if the money is used appropriately and within the guidelines set by the SBA.

How Much Money Can I Receive?
The maximum amount you can receive is your businesses’ monthly average payroll cost in 2019, multiplied by 2.5 with a maximum of up to $10 million. If you are a newer business, existing after June 30th, 2019, the SBA lender will look at costs from January and February 2020. Seasonal employers’ costs will be calculated differently, using a 12-week period beginning in either February or March 2019 and ending June 30th, 2019.

In an effort to provide the necessary help for small businesses, the goal of these government issued loans is to keep people employed during the span of the pandemic. The loans will be seen as grants from the government as long as the requirements mentioned above are met. The forgivenesses will be reduced, and businesses will be expected to repay the loan if employee counts and employee salaries are reduced by more than 25% under the Protection Payment Program. If you rehire or restore decreased salaries before June 30th, 2020 you will not be penalized or expected to pay back the loan. Adequate record keeping to prove your expenses will be required and your business will need to have spent at a minimum 75% of your loan on payroll to qualify for forgiveness.

We understand that our environment is constantly changing due to COVID-19 and at SD Associates in Elkins Park, PA, we want you to know that we are here for you. From questions about the Payment Protection Program for your small business to financial guidance and payroll assistance, our accountants are here to help you navigate these constantly changing waters. Contact us today for all your needs.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) is Enacted into Law

On March 25, 2020, the Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides much needed stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic. On March 27, 2020, the House of Representatives passed the CARES Act by voice vote. President Trump signed the bill into law that same day.

Here are some of the major takeaways for the CARES Act:


Paycheck Protection Program
The Paycheck Protection Loan Program covers the period February 15, 2020 through June 30, 2020.  The loan program will allow businesses suffering due to the coronavirus outbreak to borrow money for a variety of qualified costs related to employee compensation and benefits, including payroll costs, mortgage interest obligations, rent, continuation of health care benefits, employee compensation (of those making less than $100K), and utilities incurred before the covered period.

The legislation greatly expands the number of businesses, including individuals who operate as a sole proprietor, or independent contractor (including non-profits). The loans are fully guaranteed by the federal government  through December 31, 2020 and are generally limited to the lessor of the average monthly payroll costs for the 1 year period ending on the date the loan was made ( an alternative calculation is available for seasonal employers) multiplied by 2.5 or up to $10 million.

The loans will have a maximum maturity of 10 years and in interest rate not to exceed 4%. In addition, the standard fees imposed under section 7 of the Small Business Act are waived, and no personal guarantee is required by the business  owner.

The CARES Act calls for a portion of the above-mentioned paycheck protection loans to be forgiven on a tax-free basis.   Amounts to be considered for forgiveness  is the sum of payments that were made by the borrower that are considered qualified costs, during the 8-week period following the date of the loan. The loan forgiveness cannot exceed the principal.

Please find this link to the US Chamber of Commerce and its guide and checklist.


Emergency Government Disaster Loan and Grant
The CARES Act  expanded the Economic Injury Disaster Loans to include businesses under 500 employees but also sole proprietors.  Loans under $200,000 made under this program before December 31, 2020 will have no personal guarantees. This permits a disaster loan to be taken out between January 31, 2020 and the date on which a paycheck protection loan is available for reasons “other than payroll costs”.


Individual Stimulus Payments
The individual stimulus payment or “2020 recovery rebate for individuals” , the government will start to distribute  checks directly to taxpayers.  “Eligible individuals” can benefit from a tax credit equal to the sum of  $1,200 for single filers and $2,400 for those filing a joint return plus an amount equal to $500 multiplied by the number of qualifying children. However, the aforementioned tax credits will be “phased-out” by $5 dollars of your payment for every $100 your adjusted gross income (AGI) exceeds the following thresholds: $150,000 for joint-filers, $112,500 for heads of household, and $75,000 for single filers.

The IRS will determine the eligibility by reviewing your 2019 return, or if not available they will use your 2018 return to determine your AGI. If you weren’t required  to filed for example, you collect social security and did not have enough taxable income to necessitate the filing of a return, the IRS will review your social security benefit statement. The payments will be made between now and December 31, 2020 and in many cases will be made electronically if you have provided direct deposit information on either your 2018 or 2019 returns. It’s important to note that these payments received act as an advance payment of a credit towards your 2020 taxes and will be recalculated when that return is filed in 2021.


Distributions from Retirement funds
Coronavirus-related distributions (i.e. those who are directly afflicted with the disease, spouse or dependent  or who experiences adverse financial consequences as a result of being quarantined, laid off or being unable to work due to lack of child care) made from both eligible employer sponsored retirement plans and individual retirement accounts  are exempt from the 10% early distribution penalty tax. These distributions can be made up to $100,000. These distributions are subject to regular income tax, although it may be spread over three years.

The CARES Act temporarily waives the minimum distribution requirements for qualified plans and other individual retirements account (IRA).  This applies for all required minimum distributions that otherwise would have been required to be made in 2020.


Tax Treatment of Charitable Donation
Beginning in 2020, the  CARES Act allows taxpayers to take an “above-the-line” deduction for qualified charitable contributions of up to $300 in computing their adjusted gross income.  This deduction is only available to a taxpayer who does not itemize their deductions such as mortgage interest, real estate taxes and medical expenses.


Employer Payment of Student Loan Debt
The CARES Act permits an employer to pay up to $5,250 in 2020 of an employee’s student loan or other qualified educational expenses (master’s program), with the payments being tax-free to the employee.  To the extent that the employee’s student loan is paid, the employee cannot deduct the interest on the related debt under Section 221.


Unemployment Compensation
The CARES Act extends unemployment insurance to workers who are not normally eligible for such benefits at the state level so long as their unemployment is connected to COVID-19. Those who will now be eligible include part-time employees, independent contractors, the self-employed, freelancers and gig workers. In addition, the federal government will provide $600/week to individuals who are eligible for unemployment insurance for up to four months, through July 31, 2020, which will complement existing state unemployment benefits. The CARES Act also extends state-level unemployment insurance by an additional 13 weeks (from 26 to 39 weeks in Pennsylvania) through December 31, 2020.


Qualified Improvement Property Fix
As part of the CARES Act, it corrects a much-needed technical correction in the Tax Cuts Act and Jobs Act of 2017 (TCJA), whereby changing the life on certain “qualified improvement property” (QIP). The depreciation life on QIP property was reduced from 39 years to 15 years and thus enables companies to have 100% bonus depreciation  being available for all assets with lives less than 20 years. This change is retroactive to January 1, 2018, thus, enabling taxpayers to file amended returns for the benefit of this accelerated depreciation.


Delay of Payment of Employer Payroll Taxes
The CARES Act will allow for most employers to defer paying their share of applicable employment taxes from the time the CARES Act is signed into law through December 31, 2020. Half of this deferred amount would be due on December 31, 2021 and the other half by December 31, 2022 under Section 1109.


Changes to Net Operating  Loss Rules
The CARES Act temporarily reversed the TCJA, whereas post 2017 net operating losses were disallowed to be carried back and provided for an indefinite carryforward period.  The CARES Act permits losses from years 2018, 2019 and 2020 to be carried back for a period of 5 years. As  was the previous case, a taxpayer can forgo the carryback and instead elect to carry the loss forward.

As a result, the taxpayers can file an amended return to claim a refund.


Limitation on Business Interest
The CARES Act temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation of adjusted taxable income (as imposed under the Tax Cuts and Jobs Act) to 50 percent of adjusted taxable income (with adjustments) for 2019 and 2020. A partnership does not get to use the 50% limited adjusted taxable income, instead and disallowed interest is passed out to the partners and is suspended at the partner level under normal rules.  In 2020, 50% of the suspended interest will be permitted to be freed up and will be fully deductible. The remainder is suspended until the partnership allocates excess taxable income or excess interest income to the partner.

Understanding the Coronavirus (COVID-19) and Your Taxes

The novel coronavirus, COVID-19, is fast making its way across the United States. The global health pandemic has been impacting major corporations to local businesses and everyone in between. In response to everyone feeling the effects of COVID-19, the IRS, United States Treasury and the federal government have recently announced several changes that could impact you and your business. You may have heard about the 90-day tax extension plan, but are not sure who—or what—that covers. The experts at SD Associates are sharing everything you need to know about the tax deadline extension and are here to help you navigate the changes with ease. The IRS will continue to monitor issues related to the COVID-19 virus, and updated information will be posted on a special coronavirus page on

As of March 20th, 2020, the Treasury Department announced that Tax Day this year will now fall on July 15th, 2020.
Normally, all tax returns and anything you owe are due by April 15th, 2020. With this new extension, you now have an additional 90 days to file and pay your 2019 taxes. You will not need to file an extension to file past April 15th, 2020. The new July 15th, 2020 tax deadline is applied automatically to all taxpayers. If you need more time to file, you can request an extension to October 15th, 2020. The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.

The deadline for taxpayers who make quarterly income tax payments (self-employed) is also extended to July 15th, 2020.
This means that estimated payments that were due for the first quarter of 2020 are due on July 15th, 2020.

Pennsylvania’s state taxes are also extended.
Many states are adopting the federal extension of July 15th, 2020 and Pennsylvania is included.

If you owe taxes for 2019, you can delay your payment to the IRS until the extension date.
You will not incur any penalties or interests until July 15th, 2020.

Who is eligible for the extension deadline?
Individuals who use Form 1040, corporations who use Form 1120, partnership, associations and trusts and states who use Form 1041. While uncommon, fiscal year partnerships, associations and companies that also recognized the April 15th, 2020 filing deadline are also eligible for the extension.

If you have a tax payment and already filed and scheduled your payment, you will need to reschedule.
If you have filed and scheduled your payment for April 15th, 2020, you will need to cancel your payment and reschedule it. All changes to payments must be completed two days prior to the extension deadline of July 15th, 2020.

Families First Coronavirus Response Act
This legislation provides additional relief for individuals, self-employed and businesses impacted by COVID-19 including emergency and paid sick leave.

During this extension period, SD Associates in Elkins Park, P.A., is here to help you every step of the way and answer all of your questions. We’re all navigating uncertain waters together, and that’s why we want to provide you with the most up-to-date-information available. We understand how important your refund is now more than ever and we’re here to help you maximize your tax return. Contact us today for all your tax needs.

Tax Prep Checklist: What to Gather Before Filing

Tax season is upon us, and the experts at SD Associates want you to be prepared. We recognize this task can oftentimes be put off until the last minute, but sooner or later, that April 15th deadline will be here. To make your filing process go more quickly and smoothly this year, we’ve put together a checklist of necessary files and forms to gather before you begin.  Remember, a little advanced preparation can save you time, money, and less headaches in the long run.

Personal Information

Starting with the most obvious information, the IRS needs to know who’s filing and who is covered in your tax return. This information includes:

  • Social security numbers for yourself, spouse and all dependents.
  • Dates of birth for everyone listed on your return.
  • Did you move during the tax year or subsequent to year end?
  • Did you get married during the tax year?

Information About Your Income and Adjustments to Your Income

Gather all necessary documents that show where you received your income from in the past year, including investments. 

  • W-2 forms for you and your spouse.
  • Interest and dividend income for 1099’s.
  • Broker statements that include all sales of stock or other investment. Review these statements to ensure the cost basis is included on all sales.
  • Alimony received or paid and any unemployment compensation.
  • Other miscellaneous income, records including jury duty, gambling winnings, lottery payouts, etc.
  • Retirement income (form 1099R) and Social Security income (form SSA).
  • All self-employment business income and expenses (schedule C) or have rental properties, the income and related expenses (Schedule E).
  • All K’1 income from partnerships, trusts and S-corporations. 


The government offers several deductions and credits to help reduce your taxable income, which means more money in your pocket. Some common deductions include:

  • Childcare costs (providers name, address, EIN and amounts paid for each dependent).
  • Foreign taxes paid.
  • Medical bills ( health insurance premiums and co-pays and other medical costs).
  • Educational expenses (form 1098 T from the college or university).
  • Real Estate taxes paid.
  • Home mortgage interest (form 1098 from your mortgage company.
  • Charitable donations (separated into cash and non-cash contributions to charities).
  • Student loan interest paid.

Taxes You’ve Already Paid

Having this information available can prohibit you from overpaying when it comes time to file. This can include documents such as:

  • State and local incomes taxes paid
  • Estimated tax payments made for Federal, state or local 
  • Real estate taxes paid both personal and for rental properties

Our checklist covers some of the common documents and forms you will need to file your return. Taxes are different for everyone, so make sure you take the time to learn and gather all the correct documents unique to your situation. Please review your prior year return to make sure you don’t miss any income or expenses that might have been listed on the last years return.

Tax season can be confusing, and you don’t have to go through it alone. Our tax advisors at SD Associates are here to help. Whether you need help creating a financial strategy plan for your business, an easy way to maximize your tax deductions or you just need assistance preparing the necessary documents, contact us today for accurate and timely tax returns that can help you and your business save money.