Help Me With Sign Nebraska Banking Document

Help me with industry sign banking nebraska document now

well good afternoon hi i'm craig head with the nebraska farm bureau thank you for joining us today and watching our video today we're going to talk a little bit about some changes related to the paycheck protection program that's a program that many farmers and ranchers are very interested in as part of the federal covert assistance and to help do us do that today or hope to do that today we have with us nebraska farm bureau's president mark mccarthy mark thanks for being here thank you privilege to be here you bet and we also today with us we have jordan dux who is our director of national affairs for nebraska farm bureau thanks jordan thanks a lot craig bet and our special guest today is tina barrett who is the executive director of the nebraska farm business inc tina's been a great partner with nebraska farm bureaus we've gone through covenant and worked through a lot of these federal programs that impact farmers and ranchers so tina thank you for being here today we appreciate it all right right now mark a few things that you'd like to share with the folks watching the video yeah i mean you know the mission for nebraska farm bureau is to achieve a great quality of life and prosperity for nebraska farm marines families so uh when we think about kovid the disruptions of that uh obviously our federal government has has known that it's a big disruption too and so they provided a number of programs and so today i'm excited to just visit about just just some more of that so our members and nebraska gets a good sense of if they can participate and we're always big about bringing in those that really know know the issue and uh happy that team is here to answer all the difficult questions thanks mark it's always good to have tina here right so tina before we jump in and start kind of peppering you with the questions maybe for those folks who are not familiar with with nebraska farm business inc do you mind just providing a little bit of background sure so um nebraska farm business was started as part of cooperative extension actually back in the mid 70s and then in the early 2000s through some budget cuts we left the university and had a private company to do the same kind of work but what we do is um work with nebraska farmers all across the state and ranchers um doing tax returns financial analysis accounting work um a lot of that stuff um and so we pretty much only work with producers uh with farmers and so um we get to know the farm laws um as closely as we can even though they keep changing and and uh making it harder for us to to do that all the time so tina maybe we'll start off for those people who are not maybe familiar with the ppp program the small business administration maybe just a little bit of background you might start in there we'll start the beginning here just a little bit of background what that program's for sure my my 15 year old daughter would say that then you have not had supper at our table in the last 10 months because she has implemented a rule that we are not allowed to discuss ppp um at all at supper anymore we don't follow it but she thinks you that's a good rule so the ppp um program uh started with the cares act back in march um that they passed the first that was like the third um stimulus package but the first really big one and so what it does is allows you to go and get a loan through your local bank that includes the farm credit systems which is different for most sba programs which eliminated a lot of those lenders um and you wouldn't get a loan based off of two and a half months of your average payroll for 2019 and then if you spent the money correctly and continue to keep your employees around then they would come in and forgive that loan so we went through months of knowing unknowing or not knowing exactly how that was going to be treated tax wise we've gotten some clarification but the basis of the program is that you take a loan spend the money on on employees and some other expenses that are qualified and they'll forgive that loan okay just here at the end of the year some changes to ppp and it vastly expanded i would think in terms of some of the eligibility opportunities for farmers and ranchers participating to participate maybe let's start there uh for first-time drawers maybe what who's now eligible that might not have been to participate before yeah so uh yeah so the first round closed back in august um now we're back to being ready for first-time applicants so that might be a farmer who didn't take that loan um because they didn't know about it or because they didn't think they needed it whatever that rules or whatever that was they can go back and use the same rules and apply now we also expanded it to those farmers who had negative income because in addition to having employees you could use your self-employed income as a wage um and for those with less than a hundred thousand dollars of income which is the max for any employee [Music] they were limited to how much of that they could get so this new law allows uh farmers only it's just a uh only for agriculture only for schedule f sole proprietors too so farmers who are operating out of a partnership or an s corp or c corp cannot use the gross income rule so it's real important to understand that because it's pretty confusing and a lot of it's confusing even as it's coming through the banks so a farmer with at least a hundred thousand dollars of gross income can go in and get the full ppp loan even if they were had negative income before or had less than that other net return um and that's a loan of about twenty thousand eight hundred and thirty three dollars okay so this is what it calculates out to um they can take that now and then as soon as they spend that money they should be potentially eligible to go back for a second draw so um so in addition to the first draw they authorized a second draw in the same legislation okay about loan forgiveness and how that works so loan forgiveness they made that much easier as well so in the december bill that they passed they said any loans that are less than 150 000 can have automatic forgiveness so you still need to keep documentation of how you spent the money um but you don't have to send anything in with your application just have to certify that you did it so that makes life much simpler and that really covered about 85 percent of the ppp loans that were issued the first time around so they took the vast majority of the number of loans out and then left the compliance for the large ones okay jordan mark any questions you guys have so far tina one of the other programs that we monitored really closely was the eidl program and initially those the ppp program the idl program had a connection and it actually reduced kind of what if you qualified for eidl your initial money would get deducted from what your ppp loan would be talk a little bit about i mean it looks like they've changed some of that talk a little bit about the way those two programs interact with one another today yep so they used to they we always said that they didn't play well together um and so depending on the timing of it it affected either how much ppp loan you were eligible for or how much forgiveness you were eligible for um so again in december they said forget that you can have both and don't worry about it so for loans that were forgiven prior to december that had a portion that weren't forgiven because there was an eidl advance what we think is what we're understanding from sba is that those loans that money will automatically get take sent to the banks so that they can forgive the rest of those loans uh so i don't think anything has to be done there i think we're just going to expect additional forgiveness to come through for those who hadn't applied for forgiveness yet um it should the new applications don't have that line on there um and we should have no questions as to how that works so yeah another nice um clarification they gave us i know one of the things you mentioned was the the tax that clarification that's what you're referring to tina correct well actually there's two tax clarifications so there was the one with the eidl and how that was handled but we also uh got clarification that when the cares act was written these ppp loans were written to say that this was tax-free money and we were pretty excited about that until irs came in and said um okay we can't say that that's not tax-free money but any expenses that you use to get that forgiven aren't deductible well that's the same as saying it's taxable and so congress has told us for months that that was not their intent their intent was really to get tax-free money out there and so in december they clarified that the ppp loan proceeds are not taxable and the expenses that you use to get forgiven are deductible so that that frees that up and and becomes really the first tax-free money that you get uh as a business um and as long as i can remember i know one of the things that you had mentioned earlier was about making sure that you you get that right marked correctly in your books maybe address them that i think that's really important and the um same thing goes for the stimulus checks that you receive the 1200 per person early in the 600 now that's not taxable income either so make sure that those don't get put in your government payments so that your tax repair knows that we don't need to include that it needs to be marked separately and very clearly in your books okay any other things that the farmers have been asking you or that we should be aware of or be good tips for farmers to know right now well i think i think i mentioned the second draw alone but there is a qualification for the second draw loans that's a little different than the first so one thing we should talk about is in order to qualify for a second draw loan you have to have seen a gross receipts reduction of 25 or more in any quarter so that's kind of a confusing talk so what you really need to do is look at 2019's income per calendar quarter so even if you're a fiscal year uh tax repair it's it's the calendar quarter compared to that same calendar quarter of 2020. and if you see a 25 reduction that 20 that 2020 is 25 at least less than 2019 then you qualify to get an entire ppp based on the whole year okay so um so there is a caveat and the lenders are gonna need to know that per quarter information if you don't have um quarter by quarter records you can use an annual method but we're not finding very many farmers whose annual gross receipts in 2020 are 25 of 2019 just because we saw price increases and other things like that but we are seeing a lot especially grain producers whose income varies from one quarter to another where we saw that 25 reduction on the quarter basis so um something really important to to pay attention to there um and that in being qualified for that second draw so tina it's it's so it's gross dollars so so as a a grain producer if i just didn't sell any grain in a particular quarter then that could trigger it it could and you know another thing we're seeing is um a lot of grain producers got their mfp one payment in 2000 and the third quarter of 2019 but did not get their cfap 2 payment until the 4th quarter of 20. you know so something that simple could be the reason why you qualify so it's it's really hit and miss but we're finding you know a lot of producers who qualify so it's important to get the books out and get that checked and you know a lot of computer software programs make that very easy to look at gross receipts per quarter um and so you know that would be the first step the other thing is if you think you qualify you need to check with your tax preparer probably because gross receipts is a hard definition to define you know it should be simple but of course nothing is simple but we do think that that includes the net gain on the sale of equipment so that could be another trigger um especially where trades are now treated as sales so if you sold a or traded a combine in 2019 that could be a significant enough gain and you didn't do that in 20 that might be your trigger so um there's there's lots of things like that that that go into gross receipts but um i think you know first step is definitely to check your books and see if you're close tina you i'm going to walk you back a little bit you had talked about you mentioned a couple programs and obviously farmers have seen you know mfp two years ago but now we've had cfap one cfap two talk a little bit i mean besides just when those payments came in and how it affects the ppp stuff but talk we always get a lot of questions as if does does the fact that i received a ppp loan does that impact you know these other programs and now they addition they added new money um another 2.3 billion dollars for certain folks contract growers and swine producers talk about how all of those programs kind of interact with one another and disqualifying for one limit my my payments for the other and that type of thing yeah that was certainly a fear when ppp first came out was that if you took that it would disqualify you from whatever came through usda which ended up being cfap um but there is no correlation between those you can take both of those um the only thing that it might affect is the second drop ppp and the timing of those payments and um the other question we get a lot is all those other payments are taxable again the ppp not being taxable is a rare exception to the rule that all these other payments um including uh the twelve thousand dollar grant that a lot of people got from the state of nebraska um whether that started as a livestock grant or turned into other businesses open those two are taxable income um so it's hard when you get one piece tax breathe and then the rest you don't but um there really is no interplay there so um so you can feel free to to apply for all of these tina maybe maybe talk a little about about the the change as it applies to the employee retention credit you had mentioned there's some changes there there and you know when we talked you know last spring i kind of glassed over the employee retention credit real quick because um there with the cares act it did say that any employer that used the ppp could not do the employer retention credit and we felt the ppp was going to be a better deal um and it still is but in december they authorized us to use both for the same employer as long as we didn't use the same wages to apply for both um and for the most part we're finding a lot of producers have enough wages uh depending on the timing of the qualifications but to qualify for the employer retention credit um you need a 50 drop in grocery receipts okay um so same looking at gross receipts test that you're if you're looking for that for ppp if you notice there's a 50 reduction then you definitely want to talk to whoever is preparing your 943 form so this one does have to be employees um but what happens in 2020 and it can get pretty complicated but the credit is 50 of the wages that they that you pay in that quarter so if you qualify you'll get a credit back for half the wages that you paid in that quarter and if you qualified in one quarter you're going to automatically be qualified the second the next quarter so 50 of the wages in that quarter and then as long as you stay under 80 percent of the gross receipts of 2019 you stay qualified each quarter um in 2020 that's a max on 10 000 wages per employee so it's a 5 000 credit per employee per year okay so um again if you've got several employees five thousand dollars at a time starts to add up they changed it for 21 and extended it and it made it even better so now in for the first two quarters of 21 you only need an 80 or a 20 reduction from 2019 and they'll pay 70 percent of your wages okay so um you know a significant you've got 10 or 12 employees that are making more than 40 000 a year and that they changed it from ten thousand per year per employee to ten thousand per quarter per employee so you could get seven thousand per employee per quarter in twenty one so um starts to get to be pretty significant money and allows us actually a planning opportunity because those quarters haven't happened yet so if we can control our gross income and keep i under 80 percent um then we can qualify for that credit so again it's it's um hit and miss as to who who can control their income and make that happen but if you can it's a significant credit when you talk about it affecting folks i mean obviously it's an employee retention credit i'm a i'm a say i'm a farmer it's just it's just me um i mean i and and you know it would be a structure where you know it could be depends upon you know how they obviously how they treat their income and their and their spouse's income maybe but walk through a little bit of clarify that a little bit for me if i'm just a producer and maybe depend upon sure how i have my my business set up but walk through that a little bit sure so if you're a sole proprietor file it on a schedule f on your 1040 if you don't have any employees the employee retention credit's not for you okay um same thing with a partnership if you're if you're filed in a partnership but not have no employees still out so they didn't put a self-employed um part into the employee retention credit like they did the ppp but if you move to the s corp or the c corp level then you become an employee of the corporation and you have qualified wages i take that so there's another caveat i always forget uh that the employee retention credit does not work for related parties so um and it's it's a weird rule so the definition that they went and pulled does not actually include spouses as a related party but it does include like nephew in laws and nieces and laws so it goes way out but it doesn't include your spouse so your spouse is not related to you for this credit but your son and your brother are um so we have some rules with that to follow too so okay i think this kind of again as we talk about all this it always reminds me of our comment that we have to we tend to make but it's you you mentioned it earlier too which is always as you walk through this things get pretty complex it's always good to talk to a tax professional just because of how complex all of this can be and you want to make sure you're getting the best bang for your buck on this stuff too that's absolutely true and you know think about this is really less than three weeks old most of the stuff is is we're figuring it out as fast as they're putting information out there so um be patient with your tax preparers they learn this stuff too because uh with this wasn't in our tax updates last fall this wasn't you know this is all new stuff that's um that's really um coming at us pretty quick so tina is there a cap on these dollars i mean it's a first come first serve kind of thing yeah ppp is still gonna be first come first serve and you know last time that money went really fast um and it's hard to guess exactly how fast this money is going to go it's a little bit less than what they dished out in 20 that they appropriated so we've got that but they also pulled the rules down so instead of having 500 employees you can only have 300 employees and so uh those a lot of those really big loans that went out are not going to be eligible the second time around so it makes you think that that this this money's gonna last a little bit longer if the loans that are going out are smaller but it's hard to know um so you know if you can probably the best bet is earlier rather than later but again it's it's hard to know again you said this is just for sole proprietor on the farmer's side it's not if you farm as a corporation right so that part that that would qualify you if you to go to with a gross income test rather than the net income test would only be sole proprietor schedule enough so yeah lots of lots of things that got written into that that made it very complicated but and really those were the corporations really didn't get left out the first round because they had wages because you have to pay yourself a wage so there was a little bit more inclusion there and it was those sole proprietors that with negative incomes that really um and can't pay themselves a wage were the ones that had a little bit out i think if anybody's the loser here it's those who farm in partnerships um because they're the self-employed individuals but it it clearly says as an individual and it's pretty hard to to work around that as much as i've tried to read that differently i just can't so yeah tina maybe we talked a little bit earlier just some general tax issues a few things there anything else that you'd like to mention or that you think is important for people you know um you know i think um you know i mentioned that those stimulus checks are not taxable but your tax preparer will need to know how much you receive because we do have to reconcile that so it's going to be a question that doesn't seem important but um but we need to know um and they did set the filing deadline for february 21st which is about three weeks later than normal that means the first five returns that we can e-file into irs can be accepted on the 12th um so we're expecting a little later than normal filing season um as of this point there's no change to the march 1st deadline so we need to move forward with that as planned but i think we need to be aware that i would guess the potential is there um and you know there's already rumors and and rumblings about the april 15th deadline being pushed as well so um that doesn't always help our farmers out so much because we've got to get tax returns to banks to our renewals and everybody wants it done before they get in the tractor to start planting and um those sorts of things but you know something to be aware of and watch the news well tina i want to be cognizant of your time we we promised we wouldn't keep you all afternoon uh jordan or mark is there any other questions that you guys might have i think we're good thank you a lot to you this is very very very helpful good i'm glad that i've been living and breathing this for a few weeks i might as well share what i know so well i know we really appreciate it tina thanks jordan and thanks mark for time this afternoon and tina thank you so much for your time we really appreciate it i always want to make sure we give people an opportunity to connect so maybe tina just to close maybe how can people find you if they're looking to learn more yeah the easiest thing is to find our website it's nfbi.net and um you know we post articles and things there for for um clients so it's there and available for anybody if they have more questions you know what i know is usually written and up there so sounds great and if you want more information about nebraska farm bureau you can certainly find us at nefb.org or follow us on facebook or on twitter all of our content generally wakes its way there so thanks again to everybody this afternoon appreciate your time we'll see you next time you