Where To Find Relief for COVID-19?
Two laws have recently been passed that impact individuals and small businesses: Coronavirus, Aid, Relief, and Economic Security Act (“CARES Act”) and Families First Coronavirus Response Act (FFCRA).
As guidance is issued, the details, interpretations, and execution of the following provisions may change.
Here are a couple of key points to consider for your small business:
1) Payroll tax credit refunds: For those who have paid required sick leave or paid family leave under the recently passed FFCRA.
2) Employee retention credit: This is to encourage businesses to maintain the employment of their staff and receive a credit of up to 50% of qualified wages (up to $10,000 in wages) for each employee.
3) Payroll tax delay: The due date for payroll taxes have been extended: 50% due after December 31, 2021, the other half due December 31, 2022.
4) Net operating losses: For losses originating in 2018, 2019, or 2020, they will allow a five-year carryback, a taxpayer may elect out of the carryback.
5) Economic Injury Disaster Loans and Loan Advance: The SBA has new loan programs as a result of the National Emergency Declaration.
6) Paycheck Protection Program under the recently passed CARES Act.
Here are a couple of key points to consider for you individually:
1) Recovery rebates: The bill provides for payments to taxpayers — “recovery rebates” — which are being treated as advance refunds of a 2020 tax credit. Under this provision, individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals.
2) Unemployment Benefits: Individuals who are otherwise eligible for unemployment benefits under state or federal law will receive $600 per week, in addition to their regular unemployment compensation under state law, through July 2020. Also created “Pandemic Unemployment Assistance Program” providing unemployment benefits to individuals who otherwise would be ineligible for such benefits under state or federal law – such as individuals who are self-employed (for example, consultants or independent contractors), who are seeking part-time employment, or who lack sufficient work history. This benefit is subject to several criteria.
3) Retirement plans: Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the Sec. 72(t) 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Must be repaid within 3 years.
4) Charitable deductions: The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300). The bill also modifies the AGI limitations on charitable contributions for 2020, to 100% of AGI for individuals and 25% of taxable income for corporations. The bill also increases the food contribution limits to 25%.
Here are some other helpful resources: