The Coronavirus Aid, Relief and Economic Security (CARES) Act was just signed into law on March 27, 2020. It is a gigantic economic stimulus package with many provisions that will affect your business financially. The following are for businesses with employees and are affected by the Coronavirus Pandemic:
There is an Employee Retention Credit for employers. If you have retained employees during this difficult time, you may be eligible for this credit. This credit is effective for wages paid after March 12, 2020 through December 31, 2020. This credit will cover wages paid during the first quarter of 2020 for which your Form 941 will be due April 30, 2020. You would also need to complete IRS Form 7200 regarding the refundable portion of the credit. It is still in draft form but is available on www.IRS.gov.
Eligible employers can qualify for a refundable credit against, generally, the employer’s 6.2% portion of Social Security payroll tax for 50% of certain wages paid to employees during the COVID-19 crisis.
This credit is available to employers carrying on business during 2020 who meet one of the following criteria:
The business operations for a calendar quarter have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings.
Employers who have experienced a more than 50% reduction in quarterly receipts measured on a year-over-year basis relative to the corresponding 2019 quarter. You would use this same measurement until the company quarterly receipts are greater than 80% of the receipts of the corresponding 2019 quarter.
For employers that meet one of the foregoing criteria and have 100 or fewer full-time employees in 2019, all employee wages are eligible, even if employees haven’t been prevented from providing services. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in eligible wages and compensation paid by the employer to an employer. Thus, the credit is a maximum of $5,000 per employee.
Wages don’t include
Wages taken into account for the Families First Coronavirus Response Act for required paid sick leave or required paid family leave;
Wages taken into account for the employer income tax credit for paid family and medical leave; or
Wages in a period in which an employer is allowed for an employee work opportunity credit.
The credit is not available to employers receiving Small Business Interruption Loans.
Many of our clients have questions regarding the Economic Impact Checks that are being issued by the U. S. Treasury as a result of the Coronavirus Pandemic. The following was released by the Treasury Department and the IRS regarding these payments. For most individuals, no action will be required. However, if you have questions, please feel free to give us a call. We will continue to keep you updated as the information becomes available to us.
In an Information Release, the Treasury Department and IRS have announced that distribution of economic impact payments, made as part of the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136, 3/27/2020, the Act), will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, people who did not file 2018 or 2019 federal income tax returns will need to submit “a simple tax return” to receive the stimulus payment.
The Information Release answers the following questions:
Who is eligible for the economic impact payment? Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.
How will the IRS know where to send a payment? The vast majority of people do not need to take any action to provide IRS with a way to send them their payment. The IRS will calculate and automatically send the economic impact payment to those eligible.
How will the IRS calculate the amount of payment? For people who have already filed their 2019 tax returns, the IRS will use information from those returns to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.
What should a recipient do if IRS doesn’t have his direct deposit information? In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.
If a potential recipient is not required to file a 2018 or 2019 tax return, can that person still receive a payment? Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Persons who are otherwise not required to file a tax return will not owe tax.
How can a person in the groups listed in the above question file the tax return needed to receive an economic impact payment?IRS.gov/coronavirus will soon provide information instructing people in these groups on how to file a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.
If a person required to file a 2018 or 2019 retun has not yet filed either return, can the person still receive an economic impact payment? Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
How long are the economic impact payments available? For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.
Where can one get more information? The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.
The SBA is providing loans to small businesses to help with the economic downturn. Up to $10,000 of the loan can be considered a grant that will not need to be repaid if used for specific purposes. These loans can be applied for directly through the SBA website and up to $10,000 can be advanced to you within 3 days. For more details and to apply, please click the following link:
