• Claim business deductions with no business income. Even if your business did not generate income this year, you should claim all business deductions. Such deductions might create a net operating loss (NOL), which would carry forward to offset future taxable income.
• Claim the home office with no business income. Claim the home-office deduction even with no business income. The home-office expenses not allowed this year carry over to future years in the separate home-office deduction bucket. And this gets even more important when you consider business miles.
• Loss of business miles. Trips from your home to many business locations are personal miles if you do not deduct your home office as your principal place of business. Establishing that “principal place of business” is easier than it sounds.
• File a tax return. Without business income, you may be exempt from filing a tax return. Forget that. File a return. You need a filed return to claim the benefits above.

• Document your home office. Ensure you have appropriate documentation that proves your home office is your principal place of business.
• Claim all possible deductions. Even in a loss year, claiming all possible deductions is essential.

Despite the uncertainty of the timing of the credit’s approval, it’s crucial to proceed with the amendment to comply with tax laws and avoid potential penalties.

Our records show that the statute of limitations for your 2020 individual federal tax return expires on May 17, 2024. Given this deadline, you should have us amend your return to reflect the 2020 ERC, even though you have not received the funds. This action is necessary to ensure compliance with Section 2301(e) of the CARES Act and IRC Section 280C(a).

Additionally, I recommend filing a protective claim simultaneously to safeguard against the possibility that the IRS might reject your ERC claim or approve a lesser amount. The protective claim ensures a tax refund after the statute of limitations expires for the wages adjusted should the IRS deny or reduce your ERC claim.

Here’s what we need to do for you if you approve:

1. Amend and file your 2020 tax return before the May 17, 2024, deadline.
2. File a protective claim to cover scenarios where the ERC is less than anticipated or denied.

I understand these steps might seem burdensome, especially during uncertain times. But the steps are crucial for ensuring compliance and minimizing potential financial impacts.