Federal and state agencies have put in place programs to assist you during these challenging times with your taxes, your finances and your employment. Below a list of the main provisions and how to apply for them.
Recovery rebate for individuals
A recovery rebate of $1200 (single taxpayer) and $2400 (married taxpayers) will be issued to individuals in April 2020 if their adjusted gross income is less than $75K (single) or $150K (married filing jointly). In addition, for taxpayers who are below these income amounts, an additional payment of $500 will be issued for each qualifying child. The IRS will base these amounts on the 2019 tax return, or if 2019 has not been filed on the 2018 tax return. If no filing was done for either year, the IRS will use the social security benefit information.
To enter your information if you are a non-filer: https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment
To check the status your economic impact payment: https://www.irs.gov/coronavirus/economic-impact-payments
Retirement fund withdrawal
Individual can withdraw from their retirement funds up to $100K without being subject to the 10% early withdrawal penalty. The distributions may be repaid at any time during the 3 years from the distribution. The distribution will be included in taxable income ratably over the 3 year period.
Read more on retirement accounts rules - https://www.kbfinancials.biz/save-for-retirement.html
In 2020, taxpayer can claim an above the line deduction of up to $300 regardless of whether they itemize.
PPP Loan: Paycheck protection program
The program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgage, rent and utilities. Funds are provided in the form of a loan that will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities and if at least 75% of the funding has been used for payroll cost. In addition, forgiveness is based on the employer maintaining or quickly rehiring employees and on maintaining salary levels.
To apply for the loan: https://www.sba.gov/document/sba-form--paycheck-protection-program-borrower-application-form
This advance provides up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
To apply for the EIDL loan: https://covid19relief.sba.gov/#/
Employee Retention Credit
Employers are permitted to claim a 50% credit against wages paid. The credit is provided for the first $10,000 of wages paid to employees. The credit offsets employment taxes. To get the credit, the employer can immediately be reimbursed by reducing their required payroll deposits of payroll tax that have been withheld from their employee’s wages.
To know more about the credit: https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19
Payroll tax deferment
Businesses may postpone the payment of payroll. For employers, all of the payroll tax attributable to social security payment (6.2% of wages) is deferred. For self employed individuals, 50% of the 12.4% of self-employment tax is eligible for deferral. The payment of the payroll tax is made in 2 installments over the next 2 years: by 12/31/2021 and 12/31/2022.
Modification of Net Operating losses (NOL)
The provision temporarily removes the taxable income limitation to allows a NOL to full offset income. Losses from 2018,2019,2020 may be carried back 5 years. To apply for this provision, the taxpayer will file an amended return.
Other IRS tax assistance
1. The tax returns and tax payments due 4/15 are automatically postponed to 7/15. These include individual tax returns (1040), C-corporation tax returns (1120) and estimated tax payments (1040ES and 1120W).
2. The IRS suspends all audit and collection actions until 7/15/20.
3. The IRS suspends late penalties and interest until 7/15/20.
4. The IRS suspends the payment on installment agreements until 7/15/2020.
5. The IRS extends the time to provide Offer in compromise information until 7/15/20.
Florida state assistance:
1. The Florida reemployment website to file an unemployment claim: https://connect.myflorida.com/Claimant/Core/Login.ASPX
2. The Florida secretary of state has postponed the annual report filing from 5/1/2020 to 6/30/2020 – see following link: https://dos.myflorida.com/sunbiz/manage-business/efile/annual-report/
3. The Florida department of revenue has postponed February sales tax payments from 3/19/2020 to 4/30/2020. – see following link: https://floridarevenue.com/Pages/media.aspx
Other online resources:
1. To make an electronic tax payment: https://www.kbfinancials.biz/how-to-make-your-tax-payment-electronically-.html
2. To check your tax refund status: https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp
3. Working from home: Make sure your qualify for the Home office tax deduction – read more in the following link: https://www.kbfinancials.biz/home-office-deduction.html
As always in tax law, there are exceptions to the general rule, so make sure you contact your tax professional Karine Bauer, EA for tax answers specific to your tax situation. The views contained in this article are not tax or legal advice and are not a substitute for consulting with a tax professional. Karine Bauer, EA is an Enrolled Agent licensed by the Treasury Department with unlimited rights to represent taxpayers before the Internal Revenue Service. She is an experienced tax professional with more than 20 years of international experience.
Bear in mind the date of this article as tax laws change over time.
Updated: April 11th, 2020