Consolidated Stimulus Tax Guide-Client Friendly
Life LessonsI hope you are staying healthy and safe in these uncertain times. I wanted to pass along a very concise stimulus package tax guide that may be of some help when talking to your clients. I received this information from my CPA and thought that I should pass it on to you. I have also provided 5 important attachments--Business Tax Relief.pdf, DOLFactsheetPaidLeaveAct.pdf, DOLFactsheetPaidsickleave (002).pdf FFCRA_Poster_WH1422_Non-Federal.pdf and Payroll Protection Program Summary.pdf.
Please note that this communication is part of existing workflows I have for clients. Please note the earlier communication about the Episodes on Communication and Workflows.
Disclaimer: Information is continuously being updated, this is what we know as of right now.
Individuals:
- They will determine your check by looking at your 2019 or 2018 if you haven’t filed 2019 yet.
- $1,200 for individuals up to $75,000 in Adjusted Gross Income (before standard or itemized deduction)
- Phase out $75,000 to $99,000 individuals / $150,000 to $198,000 married filing jointly
- Those on Social Security, Supplemental Security Income, or Veterans Benefits are eligible for a relief check
- Tax filing and payment has moved to July 15th but second quarter estimated taxes are still due June 15th as of now.
Businesses:
- Employee Retention Tax Credit (ERTC):
- Refundable payroll tax up to 50% of wages paid from March 13 to Dec 31 2020.
- Maximum credit is $5,000 per employee / $10,000 wages paid per employee
- Must have had shutdown order or period of significant decline in gross receipts (50% decline from previous year)
- More than 100 employees, ERTC applies only to who are not providing services
- Coronavirus Air, Relief, and Economic Security Act (CARES Act):
- Federally guaranteed SBA loans to businesses with 500 or fewer employees
- Application process ends on June 30, 2020
- Families First Coronavirus Response Act:
- Paid Sick Leave Credit – up to 80 hours/10 days (sick with COVID-19)
- Up to $511 per day per employee
- For Employee who needs to care for someone with COVID-19 or caring for a child because the facility is closed – maximum is $200 up to 10 days/80 hours.
- Child Care Leave Credit – up to 10 weeks
- Equal to two-thirds of the employee’s regular pay – capped at $200 per day or $10,000 in the aggregate
- Unable to work because the school or child care facility is closed
- Paid Sick Leave Credit – up to 80 hours/10 days (sick with COVID-19)
- For examples: https://www.dol.gov/newsroom/
releases/osec/osec20200320
- How to get the credits – more guidance will be given in the coming days/week
- Retain an amount of the payroll taxes equal to the amount paid, instead of depositing to the IRS
- The payroll taxes include withheld federal income taxes, FICA and Employer’s FICA
If you need a disaster relief loan you can follow the link below to apply for Federally approved SBA loans for COVID-19:
https://disasterloan.sba.gov/
https://www.sba.gov/disaster-
Below is the link where you can apply for short-term, 1year interest free bridge loan. After 1 year the interest rate is 12% - Bridge Loan
https://floridadisasterloan.
Disclaimer: This information is what is known as of today, subject matter is constantly being updated by the government.
Types of loans: https://www.sba.gov/partners/
Application: https://covid19relief.sba.gov/
- In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- 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.
- Economic Injury Disaster Loans are also available to residents in declared disaster areas. To view the full list of disaster declarations, click here.
Small Business Owner’s Guide to the CARES Act:
Florida Small Business Emergency Bridge Loan: https://floridadisasterloan.
- 1 year, interest free, 12% interest after a year
Unemployment application: http://www.floridajobs.org/
- Left side under Reemployment Assistance says Connect
Small Business Debt Relief – first come first serve:
Loan Forgiveness:
- Loans may be fully or partially forgiven. Any portion of the loan used to make payroll, pay for utilities, rent, mortgage, and existing business debt may be forgiven, dollar for dollar. To receive this dollar-for-dollar loan forgiveness, however, workers need to remain employed through the end of June. Traditionally, 7(a) loans must be repaid in full, depending on the repayment terms.
- In the case of reduced headcount, lenders may reduce the amount of forgiveness for businesses that lay off employees during the first eight weeks following the loan. If wages of employees who earn less than $100,000 a year are reduced, the level of forgiveness may also get reduced.
- Businesses that have let employees go before accepting the loan will not be subject to penalties. If those businesses rehire employees after accepting the loan, they'll receive additional credit to cover wages.
Debt Relief:
- Existing borrowers can defer payments of principal, interest, and fees for up to six months, but not more than one year.
Here's how the loan forgiveness works:
- Your company's expenses for the eight-week period after the origination of the loan will be analyzed.
- Every dollar your company spent on payroll, utilities, rent, or interest on mortgage debt will be added together. That amount will be forgiven, up to the total amount your company borrowed through the program.
There is one caveat, however. The amount that is forgiven will be reduced for businesses that lay off employees during the first eight weeks following the loan. Companies that reduce wages of employees who make less than $100,000 per year by 25 percent or more will also have the forgivable amount reduced by the amount of the pay cut.
The good news is that businesses that have already let employees go before accepting the loan will not be subject to such penalties. And if those businesses rehire employees after accepting the loan, they'll receive additional credit to cover their wage
Additional information: