Special Notice to Clients — 

CORONA VIRUS ASSISTANCE CHECKLIST

By Dave Krebs, CPA (April 1, 2020)

This checklist was prepared for our clients and friends as a quick way to identify eligible programs. Please contact us for the details. Many of the details are not available yet from the government.

This is not meant to be an all-inclusive summary of the extensive programs.

Delays in Filing and Paying:

        Federal tax payments and returns due 4/15/20 are delayed until 7/15/20

        For individuals, trusts, estates, partnerships, associations, companies and corporations

        Automatically postpones all 4/15/20 filings without a limit on amount

        Includes 1st quarter 2020 federal estimates (the 2nd quarter estimate will be due before the 1st quarter)

        Penalties and interest are waived for this 90 day period

        Includes individual, trust, gift tax, and C corporation returns

       Payments for IRA’s, HSA’s, MSA’s are also delayed until 7/15/20

        2016 claim for refund (statute of limitation issues) is not delayed

        Most states will follow suit for a delay in payment and filing

Direct Payments (Rebates) to Individuals:

        Individuals with income ≤ $75,000 receive $1,200

        Married couples with income ≤ $150,000 receive $2,400

        Parents with children under age 17 receive $500 / child

        Phase-outs occur for individuals from $75,001 – $99,000 and married couples from $150,001 – $198,000

        Income is based on 2018 return unless 2019 return is filed

        Money is to be sent mid April (up to 12/31/19) by direct deposit if that info is available or by check otherwise

        Rebate is not subject to tax

        Reconciliation on 2020 return (Keep if you got too much and claim a credit if you got too little based on 2020 income)

Expanded Unemployment Benefits:

        Extra $600 / week for 4 months (in addition to state benefit)

        Maximum of 39 weeks for combined federal and state assistance

        Self-employed and independent contractors would be eligible

Retirement Account Withdrawals:

        Required minimum distributions (RMD) for 2020 is waived

        Up to $100,000 distributions that must be used for Corona related purposes

        Starting 1/1/20

        Can be repaid within 3 years or are taxed over 3 years (can elect out of 3 year spread)

        10% penalty is waived

Student Loans Held by the Dept. of Education:

        All payments can be suspended through 9/30/20

        0% interest will accrue

Federally Backed Mortgage Loans such as FNMA and FHLMC:

        180 day forbearance can be requested by the borrower

        No fees, penalties or interest beyond contractual amounts will be added

Above-the-Line Charitable Deduction:

        Maximum $300 during 2020

       Permitted even if you don’t itemize

        Donations to a donor advised fund don’t count

Qualified Family Leave:

        Employees unable to work or telework who leave for care of a child under age 18 (school or childcare is closed)

        Wages paid 4/1/20 to 12/31/20

        Employed at least 30 days

        First 10 days may be unpaid with use of accrued time and sick leave benefits

        After 10 days, paid leave is required (2/3 of normal gross pay not to exceed $200 / day with a $2,000 max)

        Maximum is 10 weeks and $10,000

Qualified Sick Leave:

        Unable to work or telework for specific virus-related reasons

        Subject to quarantine, isolation order, advised by health provider to self-quarantine, and experiencing symptoms

        80 hours of paid sick time to full-time employees

        Part-time employees based on average hours worked over a 2 week period

        No limit for length of service

        Regular rate up to a maximum of 10 days at $511 / day not to exceed $5,110 / employee to take care of self

        Regular rate up to a maximum of 10 days at $200 / day not to exceed $2,000 to take care of someone else

Qualified Family or Sick Leave General Rules:

        Small business (< 50 employees) exemptions are coming

        Increased by portion of qualified health plan expenses

        Increased by 1.45% Medicare tax

        Not subject to 6.2% SS tax

        Refundable tax credit if it exceeds the credit on employer’s payroll tax

        Comparable credits are offered to self-employed individuals (net earnings divided by 260 days)

Small Business (generally < 500 employees) Loans (Paycheck Protection Program):

        Covers employee payroll costs

        Administered by banks who are certified SBA Lenders (guaranteed 100% by SBA)

        Eligible if in operation on 2/15/20 and have employees or independent contractors

        Sole proprietors, independent contractors and the self-employed are eligible

        Qualified costs include payroll, group health care, mortgage interest, rent, utilities, interest on existing debt

        Payroll costs include salary, commission, tips, and health care insurance

        Employees and independent contractors making > $100K are not a qualified cost

        Those having a principal residence outside the US do not qualify

        Utilities include electric, gas, water, transportation, phone, and internet

        Funds must actually be used during the covered period from 2/15/20 – 6/30/20

        Loan is 2.5 * monthly payroll costs (over 12 months prior to loan) (special seasonal rules) up to $10 million

        4% loan over 10 years

        Payments will be deferred for a minimum of 6 months

        No collateral, personal guarantees or recourse to owners

        Loan principal is forgiven for proceeds used over an 8 week period for qualified costs listed above

        The 8 week period begins on the date of the loan origination

        Accrued interest would need to be paid

        Expected forgiveness is the amount lender expects borrower to expend

        At least 75% of the amount must be used for payroll costs to

        Amount forgiven is reduced if FTE headcount declines or salaries decrease

        Loans can be processed starting 4/3/20…consult your local lender

        Start gathering monthly payroll and independent contractor information for 2019 and 2020

SBA Economic Injury Disaster Loans (EIDL) (< 500 employees)

        Emergency advance up to $10,000 within 3 days of applying

        Must have been in business as of 1/31/20

        Loans available from 1/31/20 – 12/31/20

        Includes sole proprietors with and without employees

        Can still do the paycheck protection program above but the $10,000 will be applied against the loan

Employee Retention Credit:

        For employers whose operations were fully or partially suspended as a result of a government order; or

        For employers who had a significant decline in gross receipts (declined by > 50% from same quarter in prior year)

        Employers with ≤ 100 employees, all wages are eligible (limits if >100)

        Refundable payroll tax credit of 50% of wages (IRS Form 7200)

        Up to $10,000 / employee / quarter

        Cannot use this credit and the small business loan above

        Relates to wages paid 3/13/20 – 12/31/20

Employer Payments of Student Loans:

        Tax free to the employee with a maximum of $5,250

        Paid by employer for employee

        3/27/20 – 1/1/21

Net Operating Loss Expansion:

       NOL’s generated in 2018, 2019 or 2020 can be carried back 5 years

       The 80% limit on NOL’s is suspended to fully offset income

Business Interest Deduction

        Business interest deduction was increased from 30% of taxable income to 50% of taxable income

Qualified Improvement Property Technical Correction:

        100% bonus depreciation is permitted on interior improvements for non-residential property

        Retroactive for improvements after 9/27/17 filed on Form 3115 Change in Accounting

Loans to Certain Industries (the Big Winners):

        Air and cargo carriers

        Businesses critical to national security

        Hospitals

        Many government branches

        Education

Ohio Considerations:

        Ohio state and cities has delayed filing and payment date to 7/15/20

        Ohio Dept. of Insurance – employees with reduced hours still can have group coverage, health insurance payments can be delayed for 60 days, COBRA and continuation rules are loosened for now

        Ohio unemployment pays 50% of average weekly wage with a $118 minimum / week and a $424 maximum / week for 26 weeks

Other Considerations:

        Business interruption insurance – hard to prove claim

        Business liability insurance – are you exposing employees or clients to the virus

        Workers compensation – probably not but health care workers maybe

        Off premise insurance – have you thought about property being kept offsite now

        Employee rights must be posted by 4/1/20

        Stay safe!!!

SOME HELPFUL REFERENCES:

        Coronavirus Aid Relief and Economic Security Act (CARES Act) (3/27/20) https://assets.documentcloud.org/documents/20059055/final-final-cares-act.pdf

        Families First Coronavirus Response Act (3/18/20)

        IRS People First Initiative

        Loan Forgiveness Details https://www.congress.gov/bill/116th-congress/house-bill/748/text#toc- HB37C431F57484034A3D8B58B1EC16623

        SBA emergency $10K advance for EIDL https://www.sba.gov/disaster/apply-for-disaster-loan/index.html

        DOL Q & A https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

        SBA Paycheck Protection Program https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp

        IRS information https://www.irs.gov/coronavirus

The CPA Advisory Group

Reach the CPA Advisory Group by calling, emailing Info@cpaagi.com, or just filling out the contact form on this site at cpaagi.com/contact/.

Related blog posts

https://cpaagi.com/business-and-individual-tax-update/

https://cpaagi.com/new-tax-deadline/