At the same time, there are some incentives small businesses can use to get relief by filing taxes before the May 17 tax-filing deadline. The IRS in March extended the deadline from April 15. “This has been an extremely difficult year for small businesses–many have closed or paused operations because of the pandemic, and they need all the help they can get,” says H&R Block chief tax officer, Kathy Pickering.
She added, “Small business owners still seeking PPP relief should e-file their taxes by the deadline of May 17 as eligibility for these loans is connected to their tax history, payroll tax filings, income and expenses. Filing electronically by the deadline ensures everything is up-to-date for existing PPP opportunities or any future loans from the Biden administration.”
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Pickering noted regardless of whether a small business has received direct stimulus aid–such as a PPP or EIDL (Emergency Injury Disaster Loan), or other relief –other stimulus-related tax credits and deductions are available to small business owners, a reason small business owners should file by the deadline.
For instance, she says a significant tax benefit from the CARES Acts allows small businesses to file an amended tax return for 2018 and or 2019 if your business losses were limited for those years.
“It also allows businesses to carry back NOLs (net operating losses) from 2018, 2019, and 2020 to the five previous years. That means that if your business made money in the last five years, you can now reduce those prior years’ profits with this year’s loss and get money back for the taxes you previously paid.”
She says no one should have to navigate the financial challenges of the past year alone.
Pickering says Block Advisors can help small business owners unravel the complicated tax issues from 2020. She added to truly realize the financial health of your business, you need to have at least a basic understanding of your financials and what the numbers mean. She says this starts with a profit and loss (P&L) statement. Typically, a P&L is prepared around tax time. Block Advisors offers a free P&L summary as part of its small business tax prep services.
Small businesses and self-employed people can also get more information here.