COVID related Tax Issues

The links provided below are intended to provide information about the COVID related tax programs and changes that have been recently approved.

The IRS expects to process COVID credit checks to taxpayers in the middle of April.  If you need to update your mailing address with the IRS, then click this link = https://www.irs.gov/taxtopics/tc157 

If you have not filed tax returns recently and want to register with the IRS to get your payment, you can complete a form at this link to get setup to recieve your payment then click = 

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here 

SBA loans - Be very cautious!  Deal directly with your bank to apply and make sure you understand the program you are applying for.  Do not give your financial information over the phone and never via email.  You will hear that many loans will be forgiven and some will, if conditions are met.  Talk with  your banker to fully understand.  Here is a link to the SBA to learn more information about the disaster and PPP related COVID loans.

https://www.sba.gov/funding-programs/loans

Coronavirus stimulus rebates:

Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit begins to phase out for taxpayers with adjusted gross income (AGI) above $150,000 for joint filers, $112,500 for heads of households and $75,000 for other individuals. Stimulus rebates are being treated as advance refunds of a 2020 tax credit. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund they receive. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer and estates and trusts. 

Payroll tax credit refunds:

Subject to limitations and exceptions, employers of less than 500 employees are required to provide mandatory sick time and paid family leave but are eligible for payroll tax credits to offset the costs. Eligible self-employed individuals also qualify for the credits. Healthcare providers and emergency responders are excluded. 

Employers with fewer than 50 employees can be exempted.

The paid leave is available for up to 10 weeks. The first 10 days of the leave may consist of unpaid leave or accrued paid time off. The amount paid per day is calculated based on the “two-thirds rule” discussed in H.R. 6201. The credit is generally available for up to $200 in wages for each day an employee receives qualified family leave wages. A maximum of $10,000 in wages per employee would be eligible for the credit. Two weeks of sick pay must be paid when the employee is unable to work for coronavirus-related reasons. The amount of the sick pay depends on many factors, with the maximum being $511 per day ($5,110 in total) or $200 per day ($2,000 in total) based on the exact reason the employee is unable to work.   The credits can be refunded in advance using forms and instructions the IRS will provide. The IRS is instructed to waive any penalties for failure to deposit payroll taxes if the failure was due to an anticipated payroll tax credit.

Many clients have questions about Payroll / employees and unemployment - We recommend calling our ADP representative, Jenna Coyne with those questions at 303-676-8028.

As the coronavirus (COVID-19) continues to affect local communities and global economies, you may have concerns about your company’s financial well-being as well as the well-being of your employees. Or you may be wondering about how recently passed legislation impacts you and your enterprise. We’re providing a high-level summary of some of the key provisions impacting businesses and recommend discussing your particular circumstances with us in more detail.

Business Relief available

There are several recently enacted tax changes and new or expanded benefits that might be helpful to you.

Income tax filing and payment deadlines

• The IRS extended the April 15, 2020 filing and federal income tax payment deadline to July 15, 2020. However, we continue to work on filing returns as soon as possible.
• First quarter estimated tax payments usually due April 15, 2020 are now extended to July 15, 2020.

Employee retention and payroll tax credits

• A refundable tax credit has been created to assist employers in retaining employees. The credit is computed at 50% of qualified wages paid by eligible employers for up to $10,000 paid to each employee between March 13, 2020 and Dec. 31, 2020.
• Subject to limitations and exceptions, employers of less than 500 employees are required to provide mandatory sick time and paid family leave but are eligible for payroll tax credits to offset the costs. Eligible self-employed individuals also qualify for the credits. Healthcare providers and emergency responders are excluded; employers with fewer than 50 employees can be exempted.
• Employers (including self-employed individuals) will be able to postpone the employer’s share of Social Security taxes through the end of this year. The delayed payments are due in two equal payments, one due Dec. 31, 2021 and the second due Dec. 31, 2022.

Small Business Administration (SBA) loans

• Small businesses are eligible to apply for an Economic Injury Disaster Loan grant of up to $10,000. Funds should be made available within three days of a successful application, and this grant will not have to be repaid.
• Small businesses may also apply for a loan through the Payroll Protection Program. This program is designed to help provide capital to cover the cost of retaining employees. If certain criteria are met, the loan can be forgiven.  
• Other SBA programs are also available. For more guidance, see SBA’s Coronavirus Small Business Guidance and Loan Resources.

During this unpredictable and challenging time, it’s more important than ever to stay connected. We’re in this together and our thoughts go out to all who have been impacted by this unprecedented situation.

Rest assured, we’re here to help with your questions.

303-674-5561