Monthly Archives: March 2020

Economic Stimulus – What to expect and how to make sure you receive your payment

Economic impact payments of $1,200 for single taxpayer and $2,400 for married couples filing a joint return are scheduled to be distributed by the Treasury / IRS beginning some time in the next three weeks. To receive automatic payment, you need to have filed a 2019 or a 2018 federal income tax return with less than $75,000 in adjusted gross income OR $150,000 in adjusted gross income if you are a married couple filing jointly. The credits phases out for taxpayers with adjusted gross income in excess of $99,000 for singl individuals, and $198,000 for married filing jointly taxpayers.

Taxpayers with a qualifying child, under 17 years of age will receive an additional credit of $500 per qualifying child.

The payment will automatically be sent to eligible taxpayers who have filed their 2019 or 2018 tax returns. If you provided bank information when you filed your tax return that information will be used to direct deposit your payment. Don’t have direct deposit information on file with the IRS the treasury plans to develop a web portal for individuals to provide this information so stay tuned.

If you did not file a return because your taxable income was below the required filing threshold for 2019 and 2018 you will need to file a tax return to obtain your payment even if you have little or no taxable income. For example, an individual living on Social Security alone or on non-taxable disability will need to file to get their payment.
Have additional questions give us a call or check out the IRS website at

https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know?fbclid=IwAR0jV6SL949SmkR-o1O8iBp6I0yB9xwnkiRRWE8J15SoTm2-TpMlTJs9vNA

(CARES Act, H.R. 748)

SMALL BUSINESS OWNER? YOU NEED TO KNOW THIS INFO

Paycheck Protection Program Designed to provide a direct incentive for small businesses to keep their workers on payroll, by providing each small business a loan up to $10 million for payroll and certain other expenses. If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.

Economic Injury Disaster Loans and Loan Advance In response to the Coronavirus (COVID-19) pandemic, small business owners in all 50 states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

SBA Debt Relief Program This will provide a reprieve to small businesses as they overcome the challenges created by this health crisis. Under this program: The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020. The SBA will pay the principal and interest of current 7(a) loans for a period of six months.

These are just a few of the programs that are currently available for more information on these programs see the SBA website for Coronavirus (COVID-19) at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-2

First Coronavirus Response Act: Employer FICA & Self-Employed Credits

Employer FICA tax relief.

Qualified sick leave and family leave payments mandated by the new law are exempt from the 6.2% Social Security tax component of the employer FICA tax on wages. Employers must pay the 1.45% Medicare tax component of the FICA tax on qualified sick leave and family leave payments, but they can claim a credit for that outlay.

Credits for self-employed people.

For a self-employed individual who’s affected by the COVID-19 emergency, the new law allows a comparable refundable credit against the individual’s federal income tax bill. If the credit exceeds the individual’s federal income tax bill (including the self-employment tax), the excess will be refunded via a check from the government. The credit equals:

  • 100% of the self-employed person’s sick-leave equivalent amount, or
  • 67% of the person’s sick-leave equivalent amount for taking care of a sick family member or taking care of the individual’s child following the closing of the child’s school or childcare location.

The sick-leave equivalent amount equals the lesser of:

  • The individual’s average daily self-employment (SE) income, or
  • $511 per day for up to 10 days (up to $5,110 in total) to care for the individual or $200 per day for up to 10 days (up to $2,000 in total) to care for a sick family member or a child following the closing of the child’s school or childcare location.

In addition, a self-employed individual could receive a family leave credit for up to 50 days. The credit amount would equal the number of leave days multiplied by the lesser of:

  • $200, or
  • The individual’s average daily SE income.

The maximum total family leave credit would be $10,000 (50 days x $200 per day).

Credits for self-employed individuals are only allowed for days during the period beginning on a date specified by Treasury Secretary Mnuchin and ending on December 31, 2020. The beginning date will be within 15 days of March 18, 2020.

Important: To properly claim the credit, self-employed individuals must maintain whatever documentation the IRS requires in future guidance. Contact your tax professional for details.

First Coronavirus Response Act: Tax credits for emergency leave payments to employees.

The new law grants tax credits to small employers to cover payments to eligible employees while they take time off under the mandatory emergency COVID-19 paid sick leave and paid family leave provisions. These provisions apply to employers with less than 500 employees.

Emergency paid sick leave under the new law is limited to $511 per day for up to 10 days (up to $5,110 in total) for an employee who’s in COVID-19 quarantine or seeking a COVID-19 diagnosis. An employee can also receive emergency COVID-19 paid sick leave of up to $200 per day for up to 10 days (up to $2,000 in total) to care for a child whose school or childcare location has been closed or whose childcare is unavailable due to COVID-19.

In addition, the law gives an employee the right to take up to 12 weeks of job-protected family leave if the employee or a family member is in COVID-19 quarantine or if the school or childcare location of the employee’s child is closed due to the outbreak. The employer must pay at least two-thirds of the employee’s usual pay, up to a maximum of $200 per day, subject to an overall maximum of $10,000 in total family leave payments.

To help employers cover these now-mandatory emergency leave payments, the law allows a refundable tax credit equal to 100% of qualified sick leave wages and family and medical leave wages paid by the employer.

The credit applies only to eligible leave payments made during the period beginning on a date specified by Treasury Secretary Mnuchin and ending on December 31, 2020. The beginning date will be within 15 days of March 18, 2020.

The new law increases the credit to cover a portion of an employer’s qualified health plan expenses that are allocable to emergency sick leave wages and emergency family leave wages.

The credit is first used to offset the Social Security tax component of the employer’s FICA tax bill. Any excess credit is refundable, meaning the government will issue a check to the employer for the excess.

IRS unveils new People First Initiative; COVID-19 effort temporarily adjusts, suspends key compliance programs.

According to IRS Commissioner Chuck Rettig. “In addition to extending tax deadlines and working on new legislation, the IRS is pursuing unprecedented actions to ease the burden on people facing tax issues. During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate.”

The initiative addresses the following:

  • Extension of the deadline for income tax returns due April 15th to July 15th.
  • Extension of the due date for income tax payment from April 15th to July 15th.
  • Suspension of payment due under a valid installment agreement on April 1 and July 15, 2020.
  • Actions to assist those in various stages of the Offer in Compromise process.
  • Suspension of many but not all field collections activities.
  • Automatic, systemic liens and levies will be suspended during this period.
  • Suspension of the passport suspension initiate for taxpayers that delinquent in tax filing & payment.
  • Put a hold on new field, office and correspondence examinations.
  • Extension the time permitted until July 15th for taxpayers to respond to IRS requests for earned income credit verification requests.

For more information about this important IRS initiative see the IRS web site at www.IRS.gov or give us a call at 954-563-1269.