Are Profitable Physicians Still Able to Qualify for the 2nd draw, with high earnings in 2020? Maybe.
Updated: Mar 23
As you know, the Paycheck Protection Program (PPP) provides aid for Small Businesses and Individuals, providing additional funding above and beyond what was offered in 2020. Update: The deadline for the second draw is 3/31/2021. We saw many small business owners take advantage of the first draw of PPP last year and we have had many clients report that their loans have been forgiven already. Depending on the bank you went to process your loan application, some are being held up due to internal backlogs so not all have been forgiven yet. Regardless, some Small Businesses and Individuals may still qualify for this next round of coverage. Could you qualify? It may be worth trying but time is of the essence. Medical specialties that reported a one quarter difference, not limited but to include:
✔️ Dentistry Specialties and Surgical Subspecialties
✔️ Optometrists & Subspecialists
✔️ Nurse Anesthetists
✔️ General Surgeons & Plastics
✔️ ENTs: Head and Neck Surgeons
✔️ Dermatologists & Subspecialists
✔️ Primary Care and some Hospitalists
✔️ Small and Large Veterinarians
✔️ Among Many Other Specialties
While it appears that not all will be able to proceed with 2021’s new funding package, there is some language written within that may be helpful to you; which we have highlighted for you here, as pulled from www.sba.gov or www.treasury.gov sourced below. Changes are a moving target as updates are continuing to evolve. Some of the current changes are to include: ✔️ Tax Related Provisions for Businesses > Employee Retention Tax Credits > 100% Deductions for Business Meals and Expenses > Extenders – Permanent, Provisions extended to 2025, some provisions extended
through 2021 ✔️ Tax Related Provisions for Individuals >“Recovery Rebate” Payments > Charitable Contribution Provisions > Exclusion for Employer Student Loan Repayment ✔️ PPP Provisions for Small Businesses > Eligible Businesses > Loan Terms and Amounts > Permitted Uses and Forgiveness This article will not cover these additional provisions written into law under the first two categories, but we wanted to shine a light on how you may be eligible for a new application available to you now through the end of the month based upon these terms found within the Bill. **Additional Resources are below depending on your needs. See links for more.** These modifications are intended to provide relief for small business and individuals and contains over 70+ tax related provisions which is something we will leave to the government and your tax advisors to outline for you. We wanted to put this into perspective for the physicians that may have missed the first round and/or who would qualify for this phase. Could this be you?
Eligible businesses to qualify for the new phase of PPP need to have these provisions: 1) Have fewer than 300 employees if in phase two; 2) Have a 25% reduction in gross receipts between comparable quarters in 2019 and 2020; 3) If previously received the first draw of PPP, this is directed towards authorized uses; 4) Similar to the original PPP, you can select for an 8-week or 24-week loan term or coverage period following loan disbursement; 5) Forgiveness is only for covered expenses that were set forth in the original PPP such as: payroll, interest on real property mortgage obligations (excluding prepayments), interest on personal property security obligations (excluding prepayments), rent and utilities. Please see the CAA guidelines online for full descriptions on covered expenditures and/or any modifications as there could be adjustments by the time you read this. Many of our physician clients report this there was a difference between one calendar quarter from 2019 to 2020 comparatively and could prove that difference of income existed.
As you work towards your 2020 tax returns or maybe you have already submitted yours, you can use this time to go back through your 2019s to see how the income figures line up. You may be considered for an application for relief. Your tax advisor should be able to assist too.
That being said, we strongly urge you to work with a tax advisory team that can help you keep track of your financial situation now more than ever. As we move through different tax law changes over time and under the new administration, we strongly encourage you to ask your current advisors if they are ready for the upcoming changes.
A great way to find out how competent your current Team is, would be to ask them these Key Questions:
· Do you stand behind your work? · If there was an error to my filing, would you cover fees that are assessed due to the error? · Do you provide year-round consulting as my needs change? · Do you provide upfront planning prior to additional asset acquisitions? · Do you provide secure and streamlined processes online to maximize my time as a business owner and to keep me safe? and also as I may move throughout the nation?
We believe your team should enjoy staying abreast of the tax changes, a Team that can evolve with the times and stand behind their work. Additionally, a great Team will then let you know which retirement accounts and additional planning will be necessary for your asset protection among implementing modernized tax reduction strategies.
**PPP loans are forgiven if at least 60% of the loan is spent on payroll.** Payroll also includes employer retirement plan contributions such as for 401(k) and defined benefit plans.
Once you know what your essential action items are, our team can then help you navigate to the proper Tax Advisors, Investment Advisors, Financial Planners and Estate Planning Attorneys to assist in the process; depending on the strategies needed based upon your personal and business situations.
Need a Tax Advisor? Click Here
Need Payroll Assistance? Click Here
Need a Business Attorney? Click Here
To learn more about Defined Benefit Plans: Click Here
Need Comprehensive Financial Planning? Click Here
To learn more about Tax Reduction Strategies: Click Here
Need Talent Based Planning? Click Here
Need to get your partner on the same page? Click Here
Full Terms for the PPP program: Click Here
IRS Update: Tax Season Extended Click Here
Disclosure: As physician insurance specialists, we are not in the business of providing legal advice; however, we are also small business owners that have considered the legal language personally for ourselves and also with the help of our tax advisors. We recommend you speak with your Tax Advisor, Business Attorney, Estate Planning Attorney and/or any other specialist for legal advice on these matters as we are not providing legal advice here. If you need a referral to one of these, please schedule here under 'other' for a consult.
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