Author: wfcadmin

New Rules for the Employee Retention Tax Credit

The Consolidated Appropriation Act, 2021 was signed into law on December 27, 2020. This law clarifies and expands the employee retention tax credit (ERTC) enacted under the CARES Act. A key retroactive change is that employers who took PPP loans are now eligible to take the employee retention credit, so long as the same wages are not used for both.

Employee Retention Tax Credit Rules For 2020:

The credit provides a 50% tax credit up to $10,000 on qualified wages paid to the employee from 3/2/2020 to 12/31/20. The credit is available to all employers regardless of size including tax exempt organizations. There are only two exceptions: (1) state and local governments and their instrumentalities and (2) small businesses who take Small Business Loans.

Qualifying wages are all wages including health care costs that were paid to employees by employers who meet one of two alternative tests. The tests are calculated each quarter:

  1. the employer’s business is fully or partially suspended by government order due to Covid-19 during the calendar quarter or
  2. For any quarter in 2020, the employer’s gross receipts are below 50% of the comparable quarter in 2019. Once this happens, every quarter is an “eligible quarter” until the END of the quarter in which the business’s receipts have returned to at least 80% of what they were for the same quarter in 2019.

Under the 2020 rules for a company with more than 100 full time employee equivalents (FTES), no credit was available for wages paid to an employee performing services for the employer. If the employer had 100 or fewer employees on average in 2019, then the credit is based on wages paid to all the employees. If employees worked full time and were paid full time work, the employer gets the credit on those wages, as well as, any wages paid to employees who did not work.

Therefore, if you have LESS than or equal to 100 average monthly full time employee equivalents (FTES) for 2019, then ALL wages paid to an employee during an eligible quarter can give rise to the credit, even if the employee worked. For a company with more than 100 employees, the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

Employee Retention Tax Credit Rules For 2021:

Effective January 1, 2021, the credit amount is increased to 70% of qualified wages, which is includes the cost to continue providing health benefits.

Effective January 1, 2021, the credit is increased to $7,000 per employee for each of the first two quarters of 2021($10,000 in qualified wages x 70% tax credit rate), so that the maximum credit for 2021 will be $14,000 per employee.  This credit is available even if the employer received the $5,000 maximum credit for wages paid to such employee in 2020.

Effective January 1, 2021, business operations must meet one of these tests: (1) business operations must be either fully or partially suspended by a Covid-19 lockdown order, or (2) for a quarter in 2021, if gross receipts are less than 80% of gross receipts for the same quarter in 2019 are eligible for the credit.

Effective January 1, 2021, this threshold will be raised to 500 employees, so that for the first quarter of 2021, a company with 500 or fewer employees will be eligible for the credit, even if employees are working.

The Treasury will draft guidance to allow an advance payment of the credit for companies with 500 or fewer employees, based on 70% of average quarterly payroll of the same quarter in 2019.  If the amount of the actual credit determined at the end of the quarter is less than the amount of the advance payment, the company will need to repay the excess to the government.

If you would like my help or simply would like to talk about it, please call me on my cell phone at 513-509-7829.

$900 Billion COVID Relief for Small Businesses & Loan Forgiveness

Congress approved on Monday a $900 billion covid relief package and $1.4 trillion to fund the government through September 30. The $900 billion covid relief package will deliver aid to small businesses hit by the pandemic, Americans who have lost their jobs during the economic upheaval and health care workers on the front line of the crisis.

The legislation includes a second round of PPP Loans for Small businesses as well as loan-forgiveness rule changes that are favorable to PPP borrowers.

Businesses with a NAICS code beginning in 72 (generally hospitality businesses) may receive up to 3.5 times average monthly payroll costs.

To qualify for a second PPP loan:

  • A small business must have fewer than 300 employees which is down from the 500 employee maximum in the first round. And a small business must have already used or plan to use their original PPP funding. Similar to the original PPP loan program, the small business can use the loan proceeds over a period of 24 weeks and can use the funds for payroll, rent and mortgage expenses.  The bill also adds some new expenses to the list of “qualifying expenses”. These new qualifying expenses include operating expenses, workplace protection costs to protect employees from Covid and covered property damage.
  • A small business must certify that they have had a loss of revenue of 25% or greater.  This is different from the original qualification rules for PPP, which simply required the small business to state that economic uncertainty made the PPP loan necessary. Under the 25% loss of revenue test, the small business will compare their 2020 quarterly revenue against their 1st, 2nd, and 3rd quarters of revenue in 2019.  In order to qualify for the second draw PPP loan, a borrower must be able to show a loss in revenue of 25% or more from at least one quarter of 2020 as compared to that same quarter in 2019.

The second PPP loans are forgivable but must be spent on 60% on payroll costs. Since the loan amount is based on 2.5 months of average payroll, which is 10-11 weeks, and since the small business can use the funds over a 24-week period, it seems likely most small businesses will be able to use 60% of the PPP funds on payroll costs.

The new legislation provides that the forgiven PPP loans will not be taxable to the small business borrower.  This applies to all existing PPP loans under the original CARES Act as well as the new second round of PPP loans. The good news for small businesses is that borrowers can have their PPP loan forgiven and will still be able to deduct their payroll and other qualifying expenses that they used their PPP funds on.

Patent Pending Retirement Trust for Baby Boomers’ Children

William E. Hesch Law Firm, LLC

3047 Madison Road, Suite 205

Cincinnati, OH 45209

(513) 731-6601 Phone

(513) 731-4173 Fax


Patent Pending Retirement Trust for Baby Boomers’ Children

The Patent Pending Retirement Trust is an innovative trust idea that William E. Hesch, Esq., CPA, PFS created when working on an estate plan for his millennial children.  Bill was worried about his children planning for their retirement, and was trying to think of creative ways in which he could ensure that the two of them would have a sufficient amount of money to live off of when they reached retirement age.  Using his expertise in estate planning law, wills and trust law, asset protection planning and tax planning from his years of experience as an attorney, CPA, and financial planner (PFS) Bill created a Retirement Trust for his children.  In its simplest form the Retirement Trust is a trust meant to be a retirement plan for the Grantor’s children who do not expect Social Security to be, much of any help to them in thirty (30) years.

After using the trust for his estate plan, he began sharing the idea with clients over the past three years, to gauge whether or not there was a need in the estate planning market for such an instrument.  Many clients loved the concept and have in fact requested a Retirement Trust for their own estate plan.  Due to the positive reaction from his clients, Bill filed for a patent in August, 2018 and the Retirement Trust became “patent pending” in August, 2019.

Why use a Retirement Trust?

It is well known that the younger generations are not saving enough for their retirement.  Millennials are not saving for retirement in their 401(K)s and IRAs, and social security may not provide much retirement income for the generations that follow the baby boomers.  The main purpose for the Retirement Trust is to provide financial security for Grantor’s children in their retirement years.  A Retirement Trust allows the Grantor (or Grantors) to hold assets in a trust for the benefit of their children until their children reach an age specified by said Grantor, typically sixty-two (62) years of age. Upon reaching age sixty-two (62), the children begin receiving monthly distributions of retirement income, as provided for in the trust document.  There are a number of features the Grantor had customized in the instrument for his or her specific situation.

Who are the clients using Retirement Trusts?

This trust is typically used by baby boomer clients whose children are already old enough to be out of college and in the work force.  These clients want the benefits of using a revocable trust in their estate plans but are concerned with their children’s (or other beneficiaries’) financial security when they retire.  They have these concerns for many reasons, including: (1) their children’s past financial decision making; (2) have children who are entrepreneurs and are worried those children won’t have a nest egg for their retirement; (3) their children have potential creditor problems and don’t want them inheriting trust assets outright in a lump sum distribution; or (4) they believe social security benefits will not be there for their children.  It is a fact that seventy percent (70%) of lottery winners end up bankrupt in just a few years after receiving a large financial windfall.  It is not hard to believe that many children receiving a substantial windfall all at once from their parent, in their thirties or forties, may suffer the same fate.

How does the Retirement Trust work?

The Retirement Trust is a revocable trust that becomes irrevocable upon the death of the Grantor or both Grantors.  Upon the death of the Grantor, the trust is divided into sub trusts for each child.  Each child has the right to certain monthly distributions of their sub trust until that child reaches retirement age, typically age sixty-two (62).

Required distributions before reaching age sixty-two (62).

The Grantor has a choice of the method in which the required distributions before reaching the age of retirement are distributed, but it is commonly one or more of the following options: (1) a fixed dollar amount of the trust income and principal each year, adjusted for inflation annually (i.e. $20k); (2) a fixed percentage of the trust principal each year (i.e. 4% which would allow the trust nest egg to grow, while supplementing beneficiary’s income.); and (3) the Grantor may attach a work requirement to the beneficiary’s distributions before reaching the designated retirement age.  If a child becomes disabled, monthly payments commence for early retirement.

Distributions upon reaching the age of retirement.

Once the child reaches age sixty-two (62), the balance of assets remaining in that child’s sub trust are totaled and that child is entitled to a monthly annuity payment using the average monthly payment amounts that would be payed from Northwestern Mutual and New York Life annuities, payable for the remainder of that child’s life.  Typically, the trust will outline that payments shall be paid monthly beginning on the last day of the month in which the child turns sixty-two (62).

Northwestern Mutual and New York Life do not need to be the insurance companies identified in this section of the Trust.  Any insurance company’s annuities or actuarial tables or the IRS life expectancy tables can be used to compute a monthly benefit to be payable for that child’s life.  To clarify, an annuity is not actually purchased from one of these insurance companies.  The Trustee simply obtains a quote from each insurance company and pays from the trust the equivalent of the average monthly annuity payment that would have been paid from those insurance companies had an annuity actually been purchased.

For more information about this creative, innovative, Patent Pending Retirement Trust, call Bill Hesch to set up a free 30-minute initial consultation at 513-509-7829.

(Legal Disclaimer:  William E. Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

Hesch Law / CPAs Office Coronavirus Procedures

Our firm remains open and available to serve you while maintaining our top priority of keeping our employees and clients SAFE.  I am working daily at the office from 9am to 5pm and office staff are working at home as much as possible.  Meetings with staff are encouraged to be by phone conference or Zoom if possible.  Otherwise, in person meetings in the office are kept to a minimum and safe distancing is strictly observed.

Tax information can be mailed or emailed to us or can be dropped off on our 2nd floor stairwell by appointment.

Any documents that need to be executed and witnessed or dropped off are done by appointment only.  Please schedule this with Bill Hesch at 513-509-7829 or office staff at 513-731-6601 or 513-731-6612.  Arrangements can be made to schedule a drop off on the second floor stairwell to our front door entrance on Madison Road.

In regard to the sanitation of our office, the office is deep cleaned every week.  We disinfect all door handles, bath sink handles and light switches every day.

When the staff is meeting in each other’s work space or meeting with clients, both employees and clients shall wear masks.  Also, when staff enter into the common areas in our office, they shall be wearing their masks.

Hand sanitizer and masks have been provided to all staff and will be made available to any visitor in the office.

Thank you and prayers for everyone’s safety!!

Bill Hesch

William E. Hesch Law Firm, LLC
William E. Hesch CPAs, LLC
3047 Madison Road, Suite 201/205
Cincinnati, OH 45209
(513) 731-6601 Phone
(513) 731-6612 Phone
(513) 731-6613 Fax

How to Deduct Assisted Living and Nursing Home Bills

Watch your wallet: the median cost in 2018 for an assisted living facility was $48,000 and over $100,000 for nursing home care.

If you could deduct these expenses, you’d substantially reduce your income tax liability—possibility down to $0—and dramatically reduce your financial burden from these costs.

As you might expect, the rules are complicated as to when you can deduct these expenses. But I’m going to give you some tips to help you understand the rules.

Tax Deductions for General Medical Expenses

On your IRS Form 1040, you can deduct expenses paid for the medical care of yourself, your spouse, and your dependents, but only to the extent the total expenses exceed 7.5 percent of your adjusted gross income.  In December 2019, Congress retroactively reduced the 10% adjusted gross income limitation to 7.5% in 2018.  Therefore, taxpayers can file amended personal income tax returns for 2018 and 2019 as a result of that retroactive tax law change.

Medical care includes qualified long-term care services.

Assisted living and nursing home expenses can be qualified long-term care expenses depending on the health status of the person living in the facility.

If you operate a business, your business could establish a medical plan strategy that could make the medical expenses business deductions for your business. Learn more about deducting your medical expenses.

Qualified Long-Term Care Services

The term “qualified long-term care services” means necessary diagnostic,preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance

or personal care services, which

  • are required by a chronically ill individual, and
  • are provided pursuant to a plan of care prescribed by a licensed health care practitioner.

Chronically Ill Individual

A chronically ill individual is someone certified within the previous 12 months by a licensed health care practitioner as

  1. being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity;
  2. having a similar level of disability (as determined under IRS regulations prescribed in consultation with the Department of Health and Human Services) to the level of disability described in the first test; or
  3. requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

A licensed health care provider is a doctor, a registered professional nurse, a licensed social worker, or another individual who meets IRS requirements.

Activities of Daily Living Test

For someone to be a chronically ill individual, at least two of the following activities of daily living must require substantial assistance from another individual:

  • Eating
  • Toileting
  • Transferring
  • Bathing
  • Dressing
  • Continence

Substantial assistance is both hands-on assistance and standby assistance:

  • Hands-on assistance is the physical assistance of another person without which the individual would be unable to perform the activity of daily living.
  • Standby assistance is the presence of another person within arm’s reach of the individual that’s necessary to prevent, by physical intervention, injury to the individual while the individual is performing the activity of daily living.

Examples of standby assistance include being ready to

  • catch the individual if the individual falls while getting into or out of the bathtub or shower as part of bathing, or
  • remove food from the individual’s throat if the individual chokes while eating.

Cognitive Impairment Test

Severe cognitive impairment is a loss or deterioration in intellectual capacity that is comparable to, and includes, Alzheimer’s disease and similar forms of irreversible dementia, and measured by clinical evidence and standardized tests that reliably measure impairment in the individual’s short- or long-term memory; orientation as to people, places, or time; and deductive or abstract reasoning.

Substantial supervision is continual supervision (which may include cuing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired individual from threats to his or her health or safety (such as may result from wandering).

You have much to consider if you face the medical issues above. I’m happy to help you understand if your medical expenses can qualify for the medical deductions and what this means taxwise.

William E Hesch

William E. Hesch Law Firm, LLC

William E. Hesch CPAs, LLC

3047 Madison Road, Suite 201

Cincinnati, Ohio  45209

Office:  513-731-6601

Direct:  513-509-7829



2018 Tax Reform for Meals and Entertainment

The 2018 Tax Reform made a lot of changes to the meals and entertainment deductions. Here’s a short list of what died on January 1, 2018, so you can get a good handle on what’s no longer deductible:

  • Entertainment and meals while entertaining included in the cost of the event are not deductible
  • Golf
  • Skiing
  • Tickets to football, baseball, basketball, soccer, etc. games
  • Disneyland

Meals during the course of entertainment will be deductible if purchased separately from the entertainment event.

Continue reading “2018 Tax Reform for Meals and Entertainment”

Estate Planning Lessons to Be Learned From the Passing of Aretha Franklin

Aretha Franklin, a.k.a. the Queen of Soul, died August 16, 2018. She influenced millions through her music and civic actions. She was a longtime resident of Michigan, where she lived until her death. Aretha Franklin left behind four adult sons, and unfortunately for them, she did not have a will or trust. Her estate has been widely estimated to be worth currently about $80 million, and under Michigan law, her four sons will divide the estate equally among themselves.

One of the biggest reasons a person, especially someone in a financial position like
Aretha, should have a trust is for the added privacy it provides. If a person has only a will or nothing at all in place, the estate would go through probate. One of the worst things about the probate process is that it is all public record, and available to anyone’s eyes. A trust would have ensured that the nature of her assets be kept private because it avoids probate, and not put on public display.
Continue reading “Estate Planning Lessons to Be Learned From the Passing of Aretha Franklin”

Tax-Saving Tips

New IRS 199A Regulations Benefit Out-of-Favor Service Businesses

If you operate an out-of-favor business (known in the law as a “specified service trade or business”) and your taxable income is more than $207,500 (single) or $415,000 (married, filing jointly), your Section 199A deduction is easy to compute. It’s zero.

This out-of-favor specified service trade or business group includes any trade or business

Continue reading “Tax-Saving Tips”

SPECIAL NEEDS TRUSTS: Pt. 3 – Pooled Trust Mistakes

Aside from the individually structured first and third party special needs trusts, a pooled SNT is a trust that is for multiple individuals with special needs. A pooled SNT is a trust that is established and managed by a non-profit organization. It is a trust that pools together all of the assets of the disabled individuals that have accounts through the trust, as well as assets acquired through outside donations, and makes distributions to the beneficiaries based on their individual shares of the trust’s assets. Pooled SNTs are a way to relieve family members of the job of being the trustee and allows professionals to handle the tedious responsibilities of being the trustee. Some important aspects that set apart pooled SNTs from first and third party SNTs are:

  • Pooled SNTs do not have any age limits;
  • The disabled person is able to be one of the grantors of the trust; and
  • Any excess funds at death are generally kept by the non-profit.

Continue reading “SPECIAL NEEDS TRUSTS: Pt. 3 – Pooled Trust Mistakes”

SPECIAL NEEDS TRUST MISTAKES: Pt. 2 – Third Party Trust Mistakes

A Third Party Special Needs Trust is created for the benefit of a disabled person, which ensures that the disabled person will have proper care. The Third Party SNT is funded with assets typically by family and friends of the disabled person. Unlike the First Party SNT, the property is never owned by the disabled person, and there is also no payback of Medicaid or any other government benefits. When properly planned, a Third Party SNT can provide greater flexibility than a First Party SNT, and can be a very useful mechanism for providing proper care for a person with special needs.

While every state has its own requirements for Special Needs Trusts, generally, Third Party SNTs are more flexible because there are no age requirements. They also do not have to be monitored by the Probate Court in the county of their residence, and may be either revocable or irrevocable. As long as there is careful planning and proper management, there is no repayment of any governmental funds, like Medicaid.

There are common mistakes that must be avoided to ensure that the Third Party SNT works properly and will not have adverse effects on the disabled person or trustee. One of the first mistakes is improperly transferring property into the trust that may disqualify government benefits or require the trust to payback the state funds. It is essential that the property in the trust is never owned by the disabled person, and he or she have no legal right to the property. Transferring property, including money, that can be traced back to the disabled person can be considered a “step-transfer,” and would result in Medicaid and other state funds to be repaid, which could cost thousands of dollars.

Continue reading “SPECIAL NEEDS TRUST MISTAKES: Pt. 2 – Third Party Trust Mistakes”