As tax season for 2020 returns getting more complicated with the new stimulus package, PPP deadline and extended tax filing deadline, you are probably frustrated with filing or waiting for 2020 tax return, and thinking which one is a better option for you. Here are couple of topics for your consideration:

For Stimulus Check Purposes  

You should wait to file 2020 tax return if;

  • You earned too much income in 2020
  • You will remove a dependent from your 2020 tax return

You should file 2020 tax return if;

  • Your income is lower in 2020
  • You earned too much in 2019
  • You will add new dependent(s) in 2020 tax return
  • You did not have direct deposit info on 2019 tax return
  • You did not file tax return for 2019

For New Self-employment Gross Income PPP Rules Purposes

If you are qualified for New PPP Rules for Self-employed Individuals:

  • You should wait to file 2020 tax return if; your gross income is lower in 2020 1040 Schedule C line 7, compared to your 2019 return
  • You should file 2020 tax return if; your gross income is higher in 2020 1040 Schedule C line 7, compared to your 2019 return

For Unemployment Income Purposes

If you received unemployment compensation in 2020 and qualify for tax-free benefits up to $10,200, you should wait for IRS forms to be updated before filing your 2020 tax return.

Now there’s another question that arises… What if you both received unemployment income in 2020, qualify for stimulus checks and want to apply for PPP loan with New Self-employment Gross Income Rules?

The answer is simple. Contact us today and get the professional tax help you need.

References;
IRS Statement – American Rescue Plan Act of 2021
https://www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021
The American Rescue Plan Act of 2021 (H.R. 1319)
https://budget.house.gov/american-rescue-plan-act-2021-hr-1319
PPP Interim Final Rule – Revisions to Loan Amount Calculation and Eligibility Effective Mar 3, 2021
https://www.sba.gov/document/policy-guidance-ppp-interim-final-rule-revisions-loan-amount-calculation-eligibility
PPP First Draw Borrower Application Form – Schedule C Filers Using Gross Income
https://www.sba.gov/document/sba-form-2483-c-ppp-first-draw-borrower-application-form-schedule-c-filers-using-gross-income

Disclaimer
This article is intended for informational purposes and should not be taken as legal or tax advice. You must consult with your tax, financial or legal adviser about your unique financial situation before acting on anything discussed in this article. TaxBasket LLC is providing informational content for general guidance to help small business owners become more aware of certain issues and topics and this article must never be considered as a substitute for advice provided by your tax, financial or legal advisers. TaxBasket LLC or its members cannot be held liable for any use or misuse of this content.