Sroka & Co CPAs

Dear friends, We hope 2021 is starting off well for you. We wanted to share some important items with you: Employer Retention Credit (ERC)... The CARES Act established the ERC. If your business was closed by government authority due to COVID-19, OR If your gross receipts took a significant decline (at least 50% when comparing a calendar quarter in 2020 to the same quarter in 2019, or at least 20% when comparing a calendar quarter in 2021 to the same quarter in 2019, Then you may qualify for a credit of up to: 50% of wages, up to $10,000 per employee for all wages paid in 2020, or 70% of wages, up to $10,000 per employee per quarter for wages paid in 2021. If your business has applied (or will apply) for PPP loan forgiveness, you have to coordinate the two programs. In other words, you cannot use the same wages for both programs. As you might imagine, the devil is in the details. If you think your business might qualify, please contact us to discuss further. California conformity on PPP treatment coming? Have your say! As we’ve previously discussed, the feds have said that a forgiven PPP doesn’t give rise to taxable income, and you can still deduct the expenses paid with the forgiven PPP. However, California passed a law specifically disallowing a deduction for those expenses. Well, Assemblywoman Autumn Burke (who authored that law I just referenced!) has now introduced a new bill that would conform to the federal treatment. If you would like to see this bill enacted, please contact your legislators to let them know your opinion and urge them to pass this bill as soon as possible. To find your California representative, go to: http://findyourrep.legislature.ca.gov/ You can send them this message: Legislation has been introduced (AB 281) that declares the intent to conform California law to the federal law allowing the deduction of expenses paid with forgiven PPP debt. I would like to see this bill enacted, and urge you to pass this bill. In most cases, for our clients with PPP loan forgiveness we will be putting their California returns on extension until we know whether any conformity legislation is enacted. Stay healthy, The Sroka team.

Dear friends and clients, Hope you’re all celebrating the beginning of 2021! For the new year, we wanted to share three important items to keep in mind. New Form 1099-NEC...Continue reading

We hope this message finds you well! We’ve been diligently wearing our masks and staying socially distant, but now it looks like there’s hope on the horizon! So hold steady, and with some luck we’ll exchange big hugs and high-fives in 2021! As we enter our 5th year, we realize this milestone was made possible by the support of clients, friends, and associates like you. We offer our thanks and hope you know how essential you are to us as we wish you much peace and great j...oy during this holiday season and throughout the New Year. One of the real joys of the Holiday Season is this opportunity to say Thank You and to wish you happiness in the coming year. Whether you’re celebrating at home with a small group or in some other way, we wish you health, comfort, and joy this holiday season. During this season, we take time to reflect upon the good things we have like our partnership with you. We appreciate working with you and hope that the holidays and the coming year will bring health, happiness and success.

Dear clients: You may have heard that the US Congress passed new legislation on December 21st. This bill has many facets, including a new round of stimulus payments. At this moment, we wanted to point one very important item: this legislation makes it so that the forgiven PPP you may have received in 2020 does not result in taxable income (which we already knew) AND it also allows for the deduction of expenses that were paid with the PPP proceeds.... If we recently did a yearend projection for you, we treated the expenses as not deductible. The good news is that your taxable income will now be lower by the amount of the forgiven PPP. If you’d like us to re-run the projection with this latest adjustment, please contact us right away. As of yet, we don’t know what California will do (taxable, not taxable?). The change above only applies to federal treatment so far. On a separate note, we wanted to remind you of the requirements of the Cal SAVERS program: California wants more (all?) employees to have access to retirement savings programs. As such there’s a new mandate for companies that do not currently have such a program available for their employees. For companies with over 100 employees, they must have a CalSavers plan in place by June 30,2020. For companies between 51 and 100 employees, the deadline is June 30, 2021 and for companies with 5 or more employees, the deadline is June 30, 2022. The plan will require automatic enrollment for employees over the age of 18, and will allow a 30 day opt out period. Employers may not contribute to the plan, administrative fees are paid by the employees, CalSavers is a ROTH IRA plan, and the automatic enrollment is 5% of the employee’s gross income. We wanted to get this information to you right away. If you’d like to discuss this, please contact us. Happy holidays and we wish everyone a great and safe 2021.

So very proud of our team!! And thankful for the opportunity to help our community.

Our firm celebrated our 4 year anniversary today! What a crazy year... but we keep on going

During this season, we take time to reflect upon the good things we have like our partnership with you. We appreciate working with you and hope that the holidays and the coming year will bring you health, happiness and success. This year, due to Covid-19, we were not able to have our Annual Holiday Party, and so we decided that instead of the party and in lieu of holiday cards this year we would make a larger charitable donation. Our team selected these 5 charities, that ar...e close to our hearts, to make donations to: MetAvivor - Metastatic Breast Cancer Research, Support, and Awareness Choc Children’s Hospital Second Harvest Food Bank of OC Orange County Rescue Mission National Center for Missing & Exploited Children

Wondering what current tax scams are making the rounds? Read about the 2020 Dirty Dozen Tax Scams, and other useful information, at our newsletter: https://www.srokacpas.com/newsletter.php

May 28, 2020 Dear friends, As California continues the reopening phases, and we continue to adapt to strange new routines, we hope you are all safe and in good health (and retaining a healthy sense of humor).... Below are a few points of interest for this week: 1. If you’re still considering the Paycheck Protection Program loan, remember that you must apply by June 30, 2020. So, do it soon! Money is still available for this loan program, but we cannot say how long that might last. a. Remember that PPP is also available for Schedule C sole proprietors as well as Partnerships (including LLCs). 2. If you have already applied for and received the PPP loan funds, then you’re likely now looking ahead to loan forgiveness. Have you had a chance to review the loan forgiveness application and instructions? It looks fun, right? a. Although the detail required seems overwhelming, the instructions use technical language, and the calculations are a challenge, please rest assured that you are not alone. b. The SBA and Treasury have received feedback since the forgiveness instructions were made public and they will be issuing additional guidance and clarification. Stay tuned. c. If you need our assistance with completing the forgiveness forms, don’t hesitate to reach out to us. We are ready to help with as much (or as little) of the forgiveness application process as necessary. d. Again, to view the application and instructions, please visit: https://www.sba.gov//sba-form--paycheck-protection-program 3. We hope our COVID19 Tax Updates have been helpful. For reference, copies of our prior communications are available here: https://www.srokacpas.com/COVID-19-Update.php Stay healthy, The Sroka Team This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Let us all remember those courageous souls who laid down their lives to keep our nation safe. Today we praise the men and women who sacrificed their lives in the name of our country. Their selfless devotion, outstanding courage, and honor should inspire us to make their sacrifice meaningful. Warm wishes on Memorial Day!

Dear friends, The SBA has released the long-awaited loan forgiveness guidance and a Loan Forgiveness Application that Paycheck Protection Program borrowers will submit to their lenders. Here is what we learned about the forgiveness:... 1. The SBA is using a 40-hour full-time equivalency standard rather than the 30-hour FTE standard applied to most SBA loans; 2. Payroll costs "paid and incurred" over the eight-week period have been a concern. The application clarifies that payroll costs incurred but not paid during the borrower's last pay period of the eight-week forgiveness period are eligible for forgiveness if paid on or before the next regular payroll date; 3. At this point, it looks like health insurance premiums and retirement contributions incurred for the business owner are not included in the cost eligible for forgiveness; and 4. Business rent or lease payments on leases of personal property that were in force before February 15, 2020, will qualify for forgiveness. 5. The deadline to apply for forgiveness is unclear. We recommend that when the end of the eight-week period is reached (remember the eight-week period begins the day PPP funds are received), you should gather the required documents and reach out to your lender proactively. Once the forgiveness application and support documents are submitted, your lender has 60 days to reply. Provide as much back up as you can! 6. To view the full application and instructions, go to: https://www.sba.gov//sba-form--paycheck-protection-program 7. For those inclined to do a deep dive into the fun of Excel, consider the loan forgiveness calculators provided by the AICPA at: https://www.aicpa.org//sba-paycheck-protection-program-res Additional points to keep in mind: 8. As anticipated, the IRS issued guidance stating taxpayers may not deduct expenses that were paid with PPP loan proceeds. Soon after the IRS issued that guidance, Senators introduced a bill to allow tax deductions for these expenses. Who will prevail? We shall see. 9. With the markets still relatively low, this may be a good time to consider a Roth conversion. Consider these factors: a. The Federal deficit is rising significantly, making it more likely that tax rates will be going up in the future. b. Lower value in your retirement accounts means lower taxable income upon conversion. c. You may be in a lower tax bracket in 2020, which could reduce the tax cost of the conversion. d. As always, contact us to discuss your personal impact before making a major decision. Stay healthy, The Sroka Team

Happy Mother’s Day from the team at Sroka & Co CPAs!

April 29, 2020 Dear friends, The SBA has finally issued guidance on PPP for self-employed, and new funding for PPP started this week. Below we are sharing additional information on these happenings as well as following-up on certain payroll tax credits. ...Continue reading

April 15, 2020 Dear friends, As promised, we are updating you on information that has been released since our last follow-up:... 1. Economic Impact Payments (stimulus checks) started April 11th for those with direct deposit information on file with the IRS. a. Paper checks will begin early May 2020, and could take five months to process them all. b. If you filed a 2018 and/or 2019 tax return without using direct deposit information, the IRS is now offering a Get My Payment web tool that will allow you to input bank information for direct deposit of the stimulus check. c. Haven’t filed a 2018 or 2019 tax return? You may still be eligible. The IRS is also offering a Non-Filer tool for these individuals. d. Both tools can be found here: https://www.irs.gov/coronavirus/economic-impact-payments Note: we have noticed some issues with this site. It might take a few days to get the kinks worked out. 2. Paycheck Protection Program (PPP): first checks seem to have started on April 10th. 3. PPP application process open to Schedule C filers beginning April 10th. 4. Employment Economic Injury Disaster Loan (EIDL): SBA has clarified that the advance/grant will provide $1,000 per employee up to a maximum of $10,000, not a flat $10,000 per business as previously thought. 5. The IRS has further expanded its extension relief to most taxpayers. Tax filing and/or payment obligations that were originally due between April 1 - July 15, 2020, are now due July 15, 2020. This means that now the July 15 due date also includes: a. Federal 2020 2nd quarter estimate payment. b. Excise tax payments on investment income and return filings on Form 990- PF. c. Further, calendar-year partnerships and S corporation returns originally due 3/15 are also automatically extended thru July 15. 6. There is NO Required Minimum Distribution (RMD) for 2020: a. If you took your RMD in early 2020, before the CARES Act suspended the RMD requirement, you have until July 15, 2020 to recontribute those withdrawals and treat them as a non-taxable rollover. Stay healthy, The Sroka Team This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Lara's Birthday Celebration! This is how we celebrate birthdays in the Corona Age! Staying safe and social distancing.

April 3, 2020 Dear friends, We’re reaching out to you with this week’s latest news on some programs to help businesses weather the current storm:...Continue reading

Dear friends, Please know that we are here for you! We’re here now, and we’ll be here when this is over. You’re hearing from us again because just when things change they change again. Below is a quick update, and some new information, since our communication of last week:...Continue reading