Many local businesses will be needing assistance during this time as businesses are forced to close during the outbreak. Our team at Higher Images has assembled a useful set of links for your business for you to use.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act has been passed by both houses of Congress and signed into law by the President on Friday, March 27th. This $2 trillion package was designed to help the country navigate the coronavirus pandemic. Listed below are some of the most pertinent parts of the bill for you, our client, and we will be sending out additional guidance as more details of the bill are clarified and become available:
Individual Tax Provisions:
- Individual “Stimulus” Payments – Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child age 17 or under. This credit is phased out for taxpayers with adjusted gross income (AGI) above $75,000 for individuals, $112,500 for Head of Household, and $150,000 for joint filers.
- Retirement Plans – Taxpayers can take up to $100,000 in distributions from a qualified retirement plan without being subject to the 10% additional tax for early distributions until Dec 31, 2020. These distributions may be repaid within three years. Eligibility is defined as you, your spouse, or your dependent experiencing adverse financial consequences due to being quarantined, furloughed, laid off, had work hours reduced, or who can’t work due to lack of child care. These distributions are still taxable income for federal income tax purposes but you can elect to include the income over the course of three years.
- The bill also temporarily suspends the IRA required minimum distribution rules for 2020.
- Federal Student Loans – Through September 30, 2020 you have the option to not pay your federal student loans. During this time period the interest rate on federal student loans will be set to 0%. No penalties or interest will accrue from now until September 30, 2020.
- Wages, tax refunds, and Social Security benefits will also not be garnished during this period to pay for federal student loans. * Unemployment Benefits – Unemployment insurance provisions now include an additional $600/week payment to each recipient for up to four months and benefits have been expanded to self-employed persons. The first week waiting period has also been eliminated and the federal government will fund an additional 13 weeks of unemployment through Dec. 31, 2020 after state benefits run out.
- File an initial UC claim https://www.uc.pa.gov/unemployment-benefits/file/Pages/File%20an%20Ini tial%20Claim.aspx
- Existing Installment Agreements – Payments due between April 1 – July 15, 2020 are suspended. Interest will continue to accrue.
- Tax Return Filing Deadline – The individual tax filing deadline has been moved from April 15 to July 15, 2020. This includes payment of tax as well. Extended individual tax returns will still be due October 15, 2020.
- Estimated Tax Payments – The deadline for when first and second quarter estimated tax payment will be considered timely has also been pushed back to July 15, 2020.
Small Business & Self-Employed:
- Expanded Unemployment Benefits – Independent contractors and self-employed people that under traditional unemployment rules would not qualify for unemployment benefits may now file for unemployment and the length of time unemployment is available has been extended to 39 weeks.
- The UC claim form will ask for your “weekly wage” and we know that for a self-employed person this can vary wildly from week to week. We suggest using your most recent 1 year net income, dividing by 52, and using that number as your normal weekly wage. If you have any questions, feel free to contact us.
- Small Business Relief – Low interest SBA loans of up to $1 million can be obtained through Dec. 31, 2020. Most of these loans will have to be paid back but it can be over 15-30 years. SBA Disaster Assistance https://www.sba.gov/funding-programs/disaster-assistance
- Some states are also setting up small business loan programs. PA for example has set up the COVID-19 Working Capital Access Program (CWCA) https://dced.pa.gov/programs/covid-19-working-capital-access-program- cwca/
- Net Operating Losses – Net Operating Loss (NOL) rules put in place by the Tax Cuts & Jobs Act (TCJA) have been temporarily revised to allow losses arising in tax years 2018, 2019, or 2020 to be carried back 5 years.
COVID-19 and the response around it is a constantly changing landscape, but we are dedicated to helping you through this time so we can all eventually find our normal again. If you have any questions, please contact the office and we can discuss how the CARES act may be applicable to your situation.
Matthew L. Stevans, CPA, CGMA
Stevans & Associates, PLLC
P.O. Box 44108
154 Noble Avenue
Crafton, PA 15205
fax (412) 875-5769