COVID-19 Relief for American workers and businesses:
Keeping American Workers Paid and Employed:
- Small Business Job Retention Loans: Small Business Paycheck Protection Program
- This program provides small business employers with funds to pay up to 8 weeks of payroll costs including benefits as well as interest on mortgages, rent and utilities.
- A loan under this program has the potential of being fully forgiven if certain criteria is met, one of which is that at least 75% of the forgiven amount must have been used for payroll.
- Overview located here: https://home.treasury.gov/system/files/136/PPP%20–%20Overview.pdf
- Additional information located here: https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf
- Application located here: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
- Families First Coronavirus Response Act takes effect today (April 1, 2020)
- See the Covid-19 Update 03/29/2020 post at this site for information
- Payroll Tax and Self-Employment Tax Delay
- Payment is delayed by 50% for 2020 employer’s share of Social Security payroll taxes accrued through December 31, 2020.
- For Self-employment taxes ½ of the balance due accrued for 2020 will be deferred
- For both employer and self-employed the deferred amount is due with 2 payment deadlines:
- ½ of the deferred amount is due by December 31, 2021
- The other ½ is due by December 31, 2022
Assistance for American Workers, Families, and Businesses
- Economic Impact Payments
- On March 30, the US Treasury Department announced the distribution of Economic Impact Payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some seniors and others who typically do not file tax returns may need to submit a simple tax return to receive the stimulus payment.
- Eligible single individuals with gross income up to $75,000 and married individuals with up to $150,000 should receive the full amount of $1,200 for singles and $2,400 for married couples. After those thresholds the amount begins to be phased out until income reaches $99,000 for singles and $198,000 for joint filers where it is fully phased out. Parents also receive $500 for each qualifying child.
- For people who have already filed their 2019 tax returns, the IRS will use the information on that return to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use the information from their 2018 tax filing to calculate the payment. If the return reflected banking information that account will be used to deposit the stimulus check.
- If the return did not contain banking information it is anticipated there will be a site developed by the US Treasury where individuals can provide their banking information to receive checks by direct deposit rather than waiting for a check in the mail.
- The economic impact payments will be available throughout the rest of 2020. So if you don’t receive your money in the first wave that doesn’t mean you won’t receive any.
- Updates to this and other programs available here: https://IRS.gov/coronavirus
- These payments will not be taxable.
- New on 4/1/2020-people who receive Social Security benefits and are not typically required to file a tax return will not need to file a simple tax return to receive a stimulus check. Social Security recipients “need to take no action, and will receive their payment directly to their bank account” said Treasury Secretary Steven T. Mnuchin.
- Tax Rebates and Credits
- Employee Retention Credit
- Designed to encourage businesses to keep employees on their payroll.
- The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19
- Qualifying employers fall into 1 of 2 categories:
- The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter
- The employer’s gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer’s gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter.
- Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
- Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter 2020. If the employer’s employment tax deposits are not sufficient to utilize the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits due to COVID-19.
- Form 7200 located here: https://www.irs.gov/pub/irs-pdf/f7200.pdf
- Employers can also request an advance of the Employee Retention Credit by submitting Form 7200 (and bypassing the application of the credit against withholding tax deposits).
- More information located here: https://home.treasury.gov/news/press-releases/sm962
- This is not a forgiveness, it is a deferral, essentially an interest free loan that comes due on 12/31/2021 and 12/31/2022. The penalties associated with unpaid or late paid payroll taxes are harsh and the liability can be transferred to the individual owner of the company/employer, so it’s not a program to be taken unless needed.
- Expanded Unemployment Insurance
- With the CARES act passed and signed by the President on Friday March 27, 2020 people qualifying for unemployment benefits includes the self-employed/contract and part-time workers who previously were unable to claim such benefits.
- In addition, the CARES act will provide additional benefits for those workers who are receiving unemployment benefits.
- All unemployment claims for Oregonians are processed through the State of Oregon Employment Department who are currently working to update their system for the new changes, and you can keep tabs on their progress here: https://govstatus.egov.com/ORUnemployment_COVID19
- Begin your online claim here: https://secure.emp.state.or.us/ocs4/ic/ic-step1.cfm?ID=112059355&lang=E I do not know if they are set up to accept claims from self-employed/contract and part-time workers yet.
- Retirement accounts
- Through the end of 2020, individuals who are under 59-½ years old can take up to $100,000 in coronavirus-related distributions from retirement plans without the usual 10% penalty for early distributions. The distributions may be repaid within three years and any resulting income inclusion can be taken over three years.
- If you were over 70-½ at December 31, 2019 you won’t have to take required minimum distributions (RMD) in 2020. If your retirement assets have dropped in value recently, not having to take an RMD may allow those assets to recover some value before you liquidate them.
- At this point the 60-day redeposit rule is still in effect. If you decide to redeposit a distribution back into your IRA account you have 60 calendar days from the date of distribution (likely earlier than when you physically received the check) to do so and your distribution will be reversed (won’t count: –ollie, ollie auction, free, free, free). If you took out your RMD prior to the change that occurred with the signing of the CARES act on Friday March 27, you have 60 calendar days to put it back and not have it counted toward the RMD in 2020 that is now not required to be taken.
- Student loans
- If you have a federally-held student loan, your payments will be suspended through September 30, 2020 and interest won’t accrue during this period. Note this relief does not apply to private student loans.
- Employee Retention Credit
Tax Filing/Payment Deadlines
- Federal returns, as well as Oregon and California returns that were due on April 15, 2020 have had the due date pushed to July 15, 2020.
- Payments due on April 15, 2020 for 2019 return have also been pushed to July 15, 2020 for federal, Oregon and California balances due on the 2019 returns.
- Estimated taxes for the 1st quarter 2020 are due as follows:
- July 15, 2020 for federal
- June 15, 2020 for California
- April 15, 2020 for Oregon
- Estimated taxes due for the 2nd quarter 2020 are due on June 15, 2020 (the usual due date) for federal, Oregon and California.
Protecting our clients and staff
There are limitations on our physical work environment due to COVID-19, however, we’re working to minimize disruptions and impacts to you so we can still offer the same level of superior service and support you have come to expect from our team. Some of our staff members have chosen to shelter at home during the Oregon quarantine period, so we are operating at the office with limited personnel, but at this point are still open.
We have implemented procedures to protect the health and safety of our staff, clients and community including, restricting access to our office, restricting/reducing travel, exercising social distancing within the office, implementing use of the client portal and email for client documents and communications as appropriate.
Whether you have tax or financial questions or need advice on ways to navigate the expanded benefits outlined above, we’re here for you. If you have questions or concerns, please don’t hesitate to contact us via email (below) or phone (541-479-9775).
During this unpredictable and challenging time, it’s more important than ever to stay connected. We feel we are in this together and our thoughts and concerns go out to all that have been impacted by this unprecedented situation.