Federal deadline may have been extended, but NH state taxes are still due April 15
Some things Granite State businesses should know about calculating their 2020 taxes
Despite extension of the federal income tax filing deadline from April 15 to May 17, many New Hampshire businesses are scrambling to do their taxes anyway because New Hampshire’s tax deadline hasn’t budged. Nor has the deadline for payment of federal estimated taxes.
Since the calculation of many of those payments is often based on the federal tax form, here are a few things to know, according to Jim Usseglio, a principal of the accounting firm at Baker Newman Noyes
First, if you were one of those business owners who procrastinated in getting forgiveness for a Paycheck Protection Program loan, good for you. As long as a PPP loan wasn’t forgiven in 2020, you don’t have pay taxes on them at the federal or state level.
If the PPP loan was forgiven last year, you do have to count it as revenue on your state business taxes, though the state will still allow you deduct the expenses they were used for. At the federal level, you can deduct both the revenue and the expenses. The same goes for Economic Injury Disaster Loan advances, since they are grants.
The New Hampshire Senate passed a bill that would exempt forgiven PPP loans as revenue, and it is now in the House Ways and Means committee, since the hit on state revenues may range from $80 to $130 million, it may face a difficult path to passage and the governor’s signature.
Those who received funds through the state’s Covid relief Main Street Program, taxes have to be paid on that revenue at both the federal and state levels.
Also, business that received a PPP loan might be eligible for a refund on payroll taxes, thanks to some changes in the Employee Retention Credit for businesses that suffered revenue losses.
In addition, if you suffered losses in 2020, this is the last year you can carry that net operating loss deduction backward as opposed to forward on federal taxes. That means if you paid taxes on profits year, the IRS may owe you money. So that’s another reason not to wait another month to send in your federal returns “because they can get their refund as soon as they file,” said Usseglio. (The state NOL deduction only looks forward)
There are two payroll deductions could benefit businesses starting this quarter.
If you remember, when the pandemic first started, employers were required to grant both Covid-related sick time and family and medical leave for their employees, and employers were reimbursed with payroll tax deductions. The requirement ended on Dec. 31, but the stimulus package passed on Dec. 27 continued the payroll deductions for those that voluntarily offer those benefits until March 21. The American Rescue Plan continues that until Sept. 21, applies it to up to $12,000 in wages and includes taking time off to vaccinate or recover from that second shot.
Finally, the new law allows employers to put payment of part of their payment of Social Security withholding, about half at the end of the year and half to the end of next year without any penalty or interest. Self-employed filers who pay both the employer and employee portion on tax day will be able to put off the employer portion, paying half at the end of this year with the rest at the end of next.