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EIDL and PPP programs are out of funds... for now

Updated: Dec 6, 2021

Last week was a challenging for me. The highs of hearing from clients who received PPP (Paycheck Protection Program) approval before the program ran out of funds was offset by the lows of the clients who still haven't heard from their bank. Clients received an EIDL (Economic Injury Disaster Loan) advance that was less than they expected since the program changed suddenly.

Hindsight is 20/20 and there were definite differences between banks for PPP applications. Smaller local banks surprisingly had a much easier and smoother approval process. Larger banks seemed to be selective and catering to their preferred customers. I found there were different requirements, different forms, different calculations - it made for a difficult process.

Congress seems to be close to an agreement for an additional $310 billion in funds for the PPP program and $60 billion for the EIDL program. Now is the time to get your information together for the second round. Be ready, when the funding is made available you need to make your move quickly.

If you can apply at a smaller local bank or credit union, try there. If not there are other options and new banks are still signing on. PayPal and Kabbage are still accepting applications, Intuit (QuickBooks) will be accepting applications for some of their Payroll clients. Entities such as Fundera and Lendio are also taking applications will try to find you a match to a bank. There are options. Have your information ready. Reach out now, make connections.

In the meantime, there are other program still available out there. Some of these programs cannot be used together. As always it's best to consult your trusted accountant if you need help figuring out what to do. If you need help, schedule a consultation with us here.

Payroll Tax Deferral

If you have employees (including yourself), then you can postpone payment of the employer share of payroll taxes incurred from the date of enactment of the CARES Act (March 27, 2020) through December 31, 2020.

You’ll need to pay 50 percent of your 2020 postponed employer taxes no later than December 31, 2021, and the remaining 50 percent no later than December 31, 2022.

Note. Employers who have received a PPP loan may defer deposit and payment of the employer's share of Social Security tax that otherwise would be required to be made beginning on March 27, 2020, through the date the lender issues a decision to forgive the loan. Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer's share of Social Security tax due after that date.

Self-Employment Tax Deferral

If you owe self-employment tax in tax year 2020, you’ll pay it as follows:

• 50 percent on your 2020 Form 1040 return (which you file in 2021),

• 25 percent no later than December 31, 2021, and

• 25 percent no later than December 31, 2022.

Photo by Wesley Tingey on Unsplash

Employee Retention Tax Credit

The CARES Act gives you a refundable tax credit against the employer portion of employment taxes equal to 50 percent of wages paid to your employees after March 12, 2020, and before January 1, 2021.

You are eligible if

• a government order fully or partially suspended your operations during a calendar quarter due to COVID-19*,

• your gross receipts for a calendar quarter are less than 50 percent of gross receipts from the same quarter in the prior year, in which case your credit ends in the quarter when gross receipts exceed 80 percent of gross receipts from the same quarter in the prior year.

If you have more than 100 full-time employees, then you can take a credit for wages paid to your employees when they are not providing services due to COVID-19-related circumstances.

If you have 100 or fewer full-time employees, then all your employee wages qualify for the credit, whether you are open for business or subject to a shutdown order.

The maximum creditable wage amount is $10,000 per employee for all calendar quarters and includes the value of the health benefits you pay on his or her behalf.

Note. You cannot take the employee retention credit if you receive a Small Business Interruption Loan from the Small Business Administration.

COVID-19-Related Distributions from IRAs Get Tax-Favored Treatment

If you are an IRA owner who has been adversely affected by the COVID-19 pandemic, you are probably eligible to take tax-favored distributions from your IRA(s). For brevity, let’s call these allowable COVID-19 distributions “CVDs.” They can add up to as much as $100,000. Eligible individuals can recontribute (repay) CVD amounts back into an IRA within three years of the withdrawal date and can treat the withdrawals and later recontributions as federal-income-tax-free IRA rollover transactions. In effect, the CVD privilege allows you to borrow up to $100,000 from your IRA(s) and recontribute the amount(s) at any time up to three years later with no federal income tax consequences. There are no income limits on the CVD privilege, and there are no restrictions on how you can use CVD money during the three-year recontribution period. If you’re cash-strapped, use the money to pay bills and recontribute later when your financial situation has improved. Help your adult kids out. Pay down your HELOC. Do whatever you want with the money.

As long as you recontribute the entire CVD amount within the three-year window, the transactions are treated as tax-free IRA rollovers. If you’re under age 59 1/2, the dreaded 10 percent penalty tax that usually applies to early IRA withdrawals does not apply to CVDs.

Do I qualify for the CVD Privilege?

That’s a good question. Some IRA owners will clearly qualify, while others may have to wait for IRS guidance. For now, here’s what the CARES Act says.

A COVID-19-related distribution is a distribution of up to $100,000 from an eligible retirement plan, including an IRA, that is made on or after January 2, 2020, and before December 31, 2020, to an individual

  • who is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention; or

  • whose spouse or dependent (generally a qualifying child or relative who receives more than half of his or her support from you) is diagnosed with COVID-19 by such a test; or

  • who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, or forced to reduce work hours due to COVID-19; or

  • who is unable to work because of a lack of child care due to COVID-19 and experiences adverse financial consequences as a result; or

  • who owns or operates a business that has closed or had operating hours reduced due to COVID-19, and who has experienced adverse financial consequences as a result; or

  • who has experienced adverse financial consequences due to other COVID-19-related factors to be specified in future IRS guidance.

We await IRS guidance on how to interpret the last two factors. We hope and trust that the guidance will be liberally skewed in favor of IRA owners. We shall see.

Be safe and take care.


* I don’t have a great sense of what “fully or partially” shut down means yet. My best assumption for the time being is that your business would have to be located in a place where stay-at-home orders are in place. Do you qualify if your office is closed but you've pivoted to telehealth and are still able to provide services to your clients? It's really unclear at this point.

Like everything COVID-19 - programs are changing quickly and often. My goal is to give you the most accurate information at the time of publishing but please be aware that guidelines and regulations may change.


This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit


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