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66 m a s s a g e & b o d y wo r k m a rc h /a p r i l 2 0 2 1 were paid with PPP loan proceeds if their PPP loan is forgiven. 9 As of December 21, 2020, businesses that already received a PPP loan became eligible to get a second one under the new terms of the Fiscal 2021 Omnibus and COVID-19 Relief Bill. 10 DOES THE EMPLOYEE RETENTION CREDIT AFFECT MY TAXES? No. The Employee Retention Credit, a refundable tax credit against certain employment taxes, is not taxable. If you received a tax credit for qualified wages and health plan expenses paid to employees (50 percent) after March 12, 2020, and before January 1, 2021, do not include this credit in your gross income for federal 2020 Non-COVID Tax Changes 16 • The standard deduction for those married and filing jointly increased by $400 to $24,800. For single filers (and married individuals filing separately), the standard deduction rose to $12,400. For heads of household, the standard deduction will be $18,650 for tax year 2020, up $300. • The personal exemption remains at zero, which was a provision in the Tax Cuts and Jobs Act. • The alternative minimum tax (AMT) exemption for single filers is $72,900 (phase-out begins at $518,400). For married couples filing jointly, the AMT exemption is $113,400 (phase-out begins at $1,036,800). • Employer retirement plan contribution limits for 401(k)s, 403(b)s, most 457 plans, and the Thrift Savings Plan (TSP) increased to $19,500 (up $500). Catch-up contributions (employees aged 50 and older) increased to $6,500 (up $500). SIMPLE retirement account contributions increased to $13,500 (up $500). • Marginal Rates: For tax year 2020, the top tax rate remains 37 percent for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly). The other rates are 35 percent for incomes over $207,350 ($414,700 for married couples filing jointly); 32 percent for incomes over $163,300 ($326,600 for married couples filing jointly); 24 percent for incomes over $85,525 ($171,050 for married couples filing jointly); 22 percent for incomes over $40,125 ($80,250 for married couples filing jointly); 12 percent for incomes over $9,875 ($19,750 for married couples filing jointly). The lowest rate is 10 percent for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly). • For 2020, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act. IS MY SIDE†HUSTLE INCOME TAXABLE? Yes. If you earned $400 or more, you owe regular income tax on any monies earned, plus you'll also have to pay self-employment tax, which amounts to 15.3 percent for your share of your Social Security and Medicare taxes. 5 WHAT HAPPENS IF MY EMPLOYER DEFERRED PAYROLL TAXES IN 2020? In August 2020, President Trump signed an executive order, due to COVID, that allowed employers to suspend payment of the 6.2 percent Social Security tax that is normally deducted from employee paychecks. If your employer chose to defer these payments, your paychecks were likely boosted from March 27–December 31, 2020. 6 The downside to this deferral is that your employer will have to make up that money, reducing your paychecks temporarily. As of December 28, 2020, the deferrals were to be repaid between January 1 and April 30, 2021. But the Fiscal 2021 Omnibus and COVID-19 Relief Bill extended the repayment period through December 31, 2021. Penalties and interest on deferred unpaid tax liability will not begin to accrue until January 1, 2022. 7 Please keep in mind that, as an employer, if you deferred payroll taxes, you have the obligation to repay them even if you are unable to collect from the employee or former employee. WHAT ABOUT DEFERRED SELF† EMPLOYMENT TAXES? As with deferred payroll taxes, self- employed individuals were able to defer the payment of 50 percent of their Social Security tax on net earnings from self- employment income for the period of March 27–December 31, 2020. 8 Again, these deferrals will have to be repaid between January 1 and April 30, 2021, according to the latest guidance provided as of December 28, 2020. According to IRS Notice 2020- 65, deferred taxes not repaid by this time will be subject to interest, penalties, and additional amounts on the tax. HOW WILL MY PPP LOAN AFFECT MY TAXES? The CARES Act was created to provide monetary assistance to small business owners struggling to keep their doors open. One of these assistance programs was the PPP loan program, which was designed to be forgiven as long as the loan was used for certain business expenses like rent, payroll, mortgage interest, and utilities. An unexpected consequence of the PPP, though, is that small business owners will not be allowed to deduct normally deductible expenses like payroll, rent, and utilities that