Tax Breaks for Coronavirus:

April 1, 2020 | Comments Off on Tax Breaks for Coronavirus:

United States Small Business Administration (SBA)

Paycheck Protection Program – Small and midsize employers (generally those with 500 or fewer employees), sole proprietors, independent contractors, self-employed individuals and gig workers are eligible for the Paycheck Protection Program. If eligible you can borrow two and a half times your average monthly payroll expense up to a maximum of ten million dollars. The loan will be forgiven if all employees are kept on payroll and the funds are used to pay salaries, hourly wages, cash tips, paid medical leave, group health insurance premiums, interest portion of mortgage payments, rent payments and utility service agreements. If some employees are let go and/or a portion of the funds are used to pay other types of expenses, some or all of the loan will not be forgiven. Unforgiven loans we be converted to term loans with a maximum length of 10 years and maximum interest rate of 4%. For more details check out the following link to the SBA website:

https://www.sba.gov/funding-programs/loans/paycheck-protection-program

 

Economic Injury Disaster Loan – Working capital loans of up to $2,000,000 to help mitigate the temporary loss of revenue due to Coronavirus issues and includes a $10,000 advance that never has to be repaid. Funds are available within three days of a successful application. The application can be submitted online and the estimated time to complete it is two hours and ten minutes. Use the following link to access the online application:

https://covid19relief.sba.gov/#/

 

SBA Express Bridge Loans – Loans of up to $25,000 with very limited paperwork involved. This can be a term loan or it can be used as a bridge loan while your Economic Injury Disaster Loan application is being processed. Your business must have a relationship with an SBA Express Lender to apply for this type of loan. If you need to develop a relationship with an SBA Express Lender, contact your local SBA district office. The North Carolina District Office can be found online at the following link:

https://www.sba.gov/offices/district/nc/charlotte

 

SBA Debt Relief – The SBA will pay the principal and interest of new 7(a) loans issued before 9/27/2020 and current 7(a) loans for a six-month period. The 7(a) program is the SBA’s primary means of providing monetary assistance to small businesses. Check out the following link for details on the various loan options:

https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans

 

Federal Government

Payroll Tax Credits

Small and midsize employers (generally those with 500 or fewer employees) are eligible for refundable payroll tax credits. Employers will receive a dollar for dollar tax credit against payroll tax liabilities for payments made to employees for Coronavirus related leave. Eligible payroll tax liabilities include the employer and employee share of FICA (Medicare and Social Security) as well as withheld federal income taxes. Eligible payments to employees include sick leave and childcare leave. Paid sick leave allows employees to care for their own health or the health of their family members. Childcare leave allows employees to care for their children while schools and daycare facilities are closed.

If an employee is caring for their own health while out on leave, the employer credit is a maximum of $511 per day per employee for ten days (aggregate total maximum of $5,110). If an employee is caring for the health of a family member, the employer credit is a maximum of $200 per day per employee for ten days (aggregate total maximum of $2,000).

If an employee is unable to work due to their child’s school or daycare being closed, the employer credit is a maximum of $200 per day per employee (aggregate total maximum of $10,000).

 

Stimulus Checks for Individuals

Much of the press coverage has focused on the stimulus checks the US government is about to start issuing to individuals. Here are the main points:

  1. The stimulus checks are not free money that comes out of thin air. They are an advance payment of a new tax credit that will be available on your 2020 tax return. If you qualify for a stimulus check but do not receive it for some reason, you will still qualify for the tax credit when you file 2020 taxes. You either get paid now or later so do not worry about missing out.
  2. If your 2019 Adjusted Gross Income (AGI) is less than $75,000 for Single filers or less than $150,000 for Joint filers you will receive a check for $1,200 per taxpayer plus $500 per child. A traditional family of four will receive a total of $3,400. Many taxpayers have not filed their 2019 tax returns yet, so in that case the IRS will use the AGI shown on the 2018 tax return.
  3. If your filing status is Single and your AGI is more than $99,000 you are not getting a check. If your filing status is Married Filing Jointly and your combined AGI is more than $198,000 you are not getting a check.
  4. If your AGI is between the ranges outlined in items 2 and 3 above, you will receive a partial payment based on where you fall in the range. Higher AGI results in a smaller check.
  5. The IRS is going to direct deposit the funds into your bank account if they have yours on file. If not, they will mail a paper check to your address on record.
  6. If you receive calls, emails, or other communications claiming to be from the Treasury Department and offering COVID-19 related grants or stimulus payments in exchange for personal financial information, or an advance fee, or charge of any kind, including the purchase of gift cards, please do not respond. These are scams. Please contact the FBI at ic3.govso the scammers can be tracked and stopped.

Extended deadline to file and pay taxes – Individuals, trusts, estates, corporations and self-employment taxpayers have until July 15th to file and pay 2019 income taxes and first quarter 2020 Estimated Tax Payment without penalties and interest regardless of the amount owed. North Carolina has followed suit with one major exception. Interest will not be waived by North Carolina.

 

Charitable contributions for taxpayer who do not itemize deduction – To promote charitable donations during this time of crisis, the IRS will allow taxpayers to take a $300 charitable deduction write off on their 2020 tax return even if they do not itemize deductions. This is a good because only 10% of taxpayers itemize deductions.

 

Check out the IRS website that details their response to Coronavirus:

https://www.irs.gov/coronavirus

 

Check out the NC Department of Revenue website that details their response to Coronavirus:

https://www.ncdor.gov/home/ncdor-actions-covid-19

 

Posted in Tax Information