Congress has acted to extend the April 15 tax filing deadline to match the extended tax payment deadline of July 15.
This 90-day extension of time to file is welcome news for our team, as we all have been feeling the burden of the ever changing news surrounding COVID-19 and the impact it is having on our daily schedules.
Business Tax Returns
The Kregel CPA team has worked extremely hard and we’re fortunate to have already completed and filed most of the business returns by the March 16 deadline. Thank you to those who have done their part to provide us with their relevant tax information.
Personal Tax Returns
We will continue to mindfully work through your personal returns, and as needed, make use of the filing extension beyond the April 15 deadline while we navigate through our workload. We are committed to keeping the lines of communication open and will keep you updated on the status of your personal return.
Resources for Business Owners
For our business owner partners, we understand this is difficult time. With the extended tax filing deadline, we’re grateful for our increased ability to come alongside and help you with business operation matters, beyond the pressure of completing your personal tax returns. You may hear from us in the coming weeks as we look for ways to further support you.
We have compiled some resources for some questions you may have about navigating your business in the upcoming weeks:
Is my business required to close?
Here is a list of businesses by industry that may or may not continue to operate out of their physical locations. This listing was distributed for businesses in Pennsylvania, but is likely similar for other states and provides you with an idea of what to expect.
What to do with employees?
The emergency Families First Coronavirus Response Act (FFCRA) applies to all small business employers with more than 50 employees and fewer than 500 employees and provides for the following two components:
- Emergency Paid Sick Leave (EPSLA) – all full-time or part-time employees are entitled to be paid for up to two weeks when they are not able to report to work for coronavirus related reasons (in short, those subject to quarantine or isolation, experiencing systems of COVID-19, caring for someone or have children in schools that have closed).
- Emergency Family and Medical Leave Expansion Act (EFMLEA) – extends paid leave for up to ten additional weeks for employees eligible under the above provisions. This expansion act waives the previous completed 12 months and 1,250 hours to be eligible for FMLA benefit and replaces it with 30 days.
The effective date for this provision is April 2, 2020. Employers will claim tax credits against their employer portion of social security taxes for 100% of the qualified sick leave and family leave benefits paid under the Act. The expiration of this Act is December 31, 2020.
If you have under 50 employees and need to lay off your workers, you can encourage them to apply for state unemployment compensation benefits. They will need to seek out this benefit themselves via their home states unemployment compensation website. This helpful article lays out unemployment benefits for workers in Pennsylvania with a link to filing the first claim with the unemployment office.
What if I’m self-employed or a contractor?
Under the FFCRA, self-employed workers receive reimbursement in the form of tax credits if they calculate their “average daily self-employment income” and provide themselves with EPSLA payments during their leave.
Self-employed workers should calculate their net earnings for the taxable year, then divide by 260. This amount, subject to the limitations of $511 per day for the first 10 days maximum, and then $200 per day per day for up to 10 weeks, should be fully refundable as a tax credit towards your 2020 annual or quarterly tax payments.
What about small business loans?
For some business owners, there can be urgent cash flow needs due to the significant drop in revenue, and the need to continue carrying on with regular operating costs. While business loans are great options, the process may take some time in providing desired cash.
For some immediate actions to take, you can work to move any available operating cost to a credit card and use the extended credit terms provided. As things improve, be intentional about paying back those credit card balances.
If you’re considering some longer term lending options, this may be a good time to consider working through a Small Business Administration (SBA) loan package. The SBA is currently providing Economic Injury Disaster Loans (EIDL) for working capital purposes to help small businesses meet their regular ongoing business financial obligations. The general requirements under these loans include:
- Credit history acceptable to SBA.
- Show ability to repay the loan.
- Collateral is required for all EIDL loan over $25,000.
What is this $1,000 payment to all individuals?
There are a couple of bills currently under consideration that could provide up to $1,200 per individual or $2,400 per married couple and $500 per child. However, this provision has not been passed by Congress, so we still unsure of the details of how this relief payment will be implemented. However, here are some of the current eligibility guidelines outlined for these payments:
- If you earned more than $75,000 as an individual or $150,000 for married couples on your 2018 personal tax return, you are not eligible to receive this payment.
- There is currently no certainty on how this payment will be treated – it could be considered an advance tax credit payment against 2020 personal taxes, it could be straight taxable income for 2020, or it might possibly be considered a gift from the government (although this seems unlikely)
This is just a start with trying to help answer many of the questions we are asking today. Please know that we care and will support you as you wrestle with these issues and seek to make the best decisions possible. Don’t hesitate to contact us if you have any questions or concerns.
The entire Kregel CPA team thanks you for your support, and we will continue to keep you informed.