Please check out these links for the most up-to-the-minute information:
IRS Coronavirus Page: This page is a great resource for IRS tax & filing related information, including the Economic Impact Payments.
Department of Labor Families First Coronavirus Response Act (FFCRA): This page contains details on Employee Paid Leave Rights due to Coronavirus for employers with fewer than 500 employees.
SBA Economic Injury Disaster Loans (EIDL) & Loan Advance: This page contains details on EIDL programs, which include a loan advance of up to $10,000 and a working capital loan of up to $2 million.
Treasury Department Small Business Assistance: Check out this page for information on the Paycheck Protection Program, Employee Retention Credit, etc.
SC DEW Unemployment: If you need to file unemployment benefits due to COVID-19 & you reside in SC, review this site for application information.
AICPA State Updates: Check out this page for current information on state filings and payment deadlines.
Please note that the information below is based on our current knowledge from reliable sources, but all the information is subject to change. We will do our best to make timely updates and will continue to monitor authoritative sources regarding changes. For the most up-to-date information, please use the links above.
The IRS has extended tax filing and payments due on April 15, 2020, to July 15, 2020. This includes Individual (1040), C Corporation (1120), Trusts/Estates (1041), Gift Tax (709), and other fiscal year tax returns and payments due on April 15, 2020.
The 2020 1st quarter estimated tax payments have also been extended to July 15, 2020. At this time, the 2020 2nd quarter estimated tax payments are still due on June 15, 2020.
39 states (including SC, NC & GA) have extended tax filing and payment due dates from April 15, 2020, to June 15, 2020. 7 states have changed to other deadlines: IA (7/31), HI (7/20), ID (6/15), NH (6/15), MS (5/15), VA (5/1 filing; 6/1 payments), WA (6/15), and Puerto Rico (6/15).
Below are some highlights of the tax implications for Individuals from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- See Economic Impact Payment section.
No 10% Additional Tax on COVID-19 Related Retirement Plan Distributions
- The 10% additional tax will not apply to any Coronavirus-related distribution from a retirement plan, up to $100,000 made from Jan. 1 – Dec 31, 2020.
- To qualify, you must meet one of three conditions: 1) be diagnosed with SARS-CoV-2 or COVID-19 by a test approved by the CDC, 2) have a spouse or dependent who is diagnosed with such a disease by an approved test, or 3) experience adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced, being unable to work due to lack of child care, closing or reducing of business hours due to COVID-19.
- Distributions can be contributed back to the retirement plan at any time during the 3-year period beginning on the day after the date on which the distribution was received.
- Distributions can be included in income ratably over the three-year tax period beginning with the 2020 tax year.
RMD Requirement Waived for 2020
- RMD requirements do not apply for the calendar year 2020.
- This applies to any RMD payments required in 2020, including those that were to begin in 2020 and to those that would have been required in 2020 because they were not previously made before Jan. 1, 2020.
$300 Above the Line Charitable Deduction
- For taxpayers who do not choose to itemize deductions, you will be eligible to take an above the line deduction for qualified charitable contributions made in 2020 and beyond, up to $300.
- The contribution has to be made in cash, made to a qualified charity, and which is not for the establishment of a new or maintenance of an existing donor advised fund.
Modification of Limits on Cash Charitable Contributions in 2020
- In 2020, taxpayers can elect to disregard the 60% limit on cash contributions and rules on carryovers of excess contributions.
Employer Paid Student Loans Temporarily Tax-Excluded
- “Eligible student loan repayments” made before Jan. 1, 2021 are now included in the employer paid educational expenses that are excluded from the employee’s gross income .
- These payments are subject to the overall limitation of $5,250 per employee for all educational payments by the employer.
- Taxpayers will not be able to take the student loan interest deduction for student loan repayments for which the employer education paid expenses exclusion is allowable.
Below are the highlights from the Coronavirus Aid, Relief, and Economic Security (CARES) Act for businesses:
Employee Retention Credit for Employers
- The CARES Act provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis.
- This applies to employers whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.
- The credit is not available to employers receiving Small Business Interruption Loans under Section 1102 of the Act.
- All employee wages are eligible for employers with an average number of less than 100 full-time employees in 2019, regardless of whether the employee is furloughed. For employees with a larger average number of full-time employees in 2019, only the wages of employees who are furloughed or face reduced hours are eligible for the credit.
- No credit is available with respect to an employee for any period for which the employer is allowed a Work Opportunity Credit for that employee.
Delay of Payment of Employer Payroll Taxes
- Employers can defer the employer portion of certain payroll taxes through the end of 2020.
- 50% of the deferred employer portion of the payroll taxes will be due by Dec. 31, 2021, and the remaining 50% will be due by Dec. 21, 2022.
Temporary Repeal of Taxable Income Limitation for Net Operating Losses (NOLs)
- The CARES Act temporarily removes the limits on NOL deductions to fully offset income.
Carryback of NOLs Allowed
- For tax years beginning after Dec. 31, 2018 and before Jan. 1, 2021, NOLs arising in those years may be carried back to each of the five tax years preceding the tax year of the loss.
Modification to Loss Limitations for Noncorporate Taxpayers
- The CARES Act temporarily modifies the loss limitation for noncorporate taxpayers so that they can deduct excess business losses arising in 2018, 2019, and 2020.
Accelerated Corporate Minimum Tax Credit (MTC)
- The CARES Act allows corporations to claim 100% of ATM credits in 2019.
Deductibility of Interest Expense Temporarily Increased
- The CARES Act temporarily and retroactively increases the limitation on the deductibility of interest expense from 30% to 50% for tax years beginning in 2019 and 2020.
- There are special rules for partnerships. Please ask for more information if interested.
Bonus Depreciation Correction
- The Tax Cuts and Jobs Act of 2017 is amended to allow 100% additional first-year depreciation deductions (Bonus Depreciation) for certain qualified property: qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.
- These are now designated as 15-year property for depreciation purposes.
Economic Impact Payment
Single taxpayers who have an Adjusted Gross Income (AGI) of less than $75,000 are eligible for the full $1,200 payment, and married couples filing who file jointly and have an AGI of $150,000 or less are eligible for the full $2,400 payment. There is an additional $500 credit per eligible child.
The payment will be reduced by $5 for each $100 over the $75,000/$150,000 thresholds. Single filers with an AGI over $99,000 and joint filers with an AGI over $198,000 are not eligible.
The IRS will use the AGI from your 2019 tax returns, unless the 2019 tax returns have not been filed, in which case they will use your 2018 AGI.
The IRS will direct deposit the payment using bank information from your 2019 tax returns (or 2018 if you have not filed 2019).
If the IRS does not have your direct deposit information, the Treasury Department is planning to create a web portal where you can provide your banking information. Otherwise, payments will be mailed to the last known address.
Yes, you can still receive the payment. In order to do so, you will need to file your 2018 or 2019 tax returns as soon as possible.
If the advance rebate you received during 2020 was less than the credit to which you were entitled for 2020, you will be able to claim the balance of the credit when filing the 2020 return. If the rebate was greater than the credit to which you were entitled, you won’t have to pay back the excess.
Families First Coronavirus Response Act (FFCRA)
The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to employers with <500 employees. Small businesses with less than 50 employees may qualify for exemptions from the requirement to provide leave due to school closings or child care unavailability, if providing leave would jeopardize the business.
All employees are eligible for two weeks of paid sick time for specific reasons related to Coronavirus. All employees who have been employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child if the circumstances are related to Coronavirus.
There are six reasons under FFCRA that would qualify an employee for paid sick time if the employee is unable to work or telework:
- the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19
- The employee has been advised by a health care provider to self-quarantine related to COVID-19
- The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis
- The employee is caring for an individual subject to an order described in (1) or self-quarantined as described in (2)
- The employee is caring for a child whose school or place of care is closed for reasons related to COVID-19
- The employee is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
For reasons 1-4 and 6, a full-time employee is eligible for 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period.
For reason 5, a full-time employee is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave) at 40 hours a week, and a part-time employee is eligible for the number of hours that the employee is normally scheduled to work over that period.
For reasons 1-3, the employee is entitled to pay at their regular rate, up to $511 per day, for up to 10 days (not to exceed $5,110 in total per employee).
For reasons 4 or 6, the employee is entitled to pay at 2/3 of their regular rate, up to $200 per day, for up to 10 days (not to exceed $2,000 in total per employee).
For reason 5 (child care), the employee is entitled to pay at 2/3 of their regular rate, up to $200 per day, for up to 12 weeks (not to exceed $12,000 in total per employee).
The effective date of FFCRA’s paid leave provision are effective on April 1, 2020, and apply to leave from April 1 – December 31, 2020.
As an employer, you will receive 100% reimbursement for paid leave pursuant to FFCRA. You will not have tax liability for employer portions of FICA taxes, and you will also receive an additional credit for pro-rated health insurance costs per employee.
As of April 1, 2020, the IRS has said that employers who have paid qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying leave paid rather than depositing the equivalent taxes with the IRS.
For example, if you paid $5,000 in sick leave and were otherwise required to deposit $8,000 of payroll taxes, including taxes withheld from all its employees, you could use up to $5,000 for the qualified leave payments and only be required to deposit $3,000.
If there are not sufficient payroll taxes to cover the cost of the qualified leave paid, you will be able to file a request (Form 7200) for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less.
Yes, but you cannot claim both credits on the same wages.
Employee Retention Credit
The Employee Retention Credit is a fully refundable tax credit for employers equal to 50% of qualified wages that are paid to employees from March 13 – Dec 31, 2020. The maximum amount that can be taken for each employee in total is $10,000 of wages, so the maximum credit to the employer per employee is $5,000.
Eligible employers are those that carry on business in 2020 and either:
- Fully or partially suspend operations at any point in 2020 due to federal, state or local orders limiting commerce, travel, or group meetings due to COVID-19; or
- Experience a significant decline in gross receipts during the calendar quarter.
When you file the quarterly payroll returns (Form 941), you can fund qualified wages by accessing federal employment taxes, including withheld taxes, that are required to be deposited with the IRS. You can also request an advance credit from the IRS.
For example, if you paid $10,000 in qualified wages and are therefore entitled to a $5,000 credit, if you were otherwise required to deposit $8,000 in federal employment taxes, you may keep up to $5,000, and only deposit the remaining $3,000 on your required deposit date. You will need to account for the $5,000 on the quarterly payroll returns. (This is assuming you have not paid sick or family leave credits under FFCRA.)
Yes, but you cannot receive both credits for the same wages.
Wages paid from March 13 – Dec 31, 2020, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.
You can only choose to take advantage of one of the following:
- Receive loan forgiveness for the SBA Payroll Protection Loan
- Employee Retention Credit
- Delay of deposit of employment taxes
SBA Loan: The Paycheck Protection Program
The Paycheck Protection Program offers eligible businesses the lesser: of $10,000,000 or up to two months of your average monthly payroll costs from prior year plus an additional 25% of that amount. You can view more information on the Treasury Department’s website.
Eligible employers are:
- Companies or 501(c)(3) non-profits with < 500 employees; OR
- Sole proprietors, the self-employed, and independent contractors
- Must have been in operation as of 2/15/2020
- The funds will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (at least 75% of forgiven amount must be for payroll) over the 8 week period after the loan is made.
- Payroll costs are capped at $100,000 on an annualized basis for each employee.
- Forgiveness of the loans will be based on employers maintaining or quickly re-hiring employees and maintaining salary levels.
- You will need to submit the loan forgiveness request to the lender servicing the loan and provide documentation to prove how the loan was used.
- Any unforgiven amounts will have a 1.0% fixed rate and will be due in 2 years.
- Applications will begin to be accepted on April 3, 2020, for small businesses and sole proprietorships. Self-employed and independent contractors can start applying on April 10, 2020.
- Loans will be given out on a first come, first serve basis.
- You can apply through any existing SBA 7(a) lender, federal insured bank, credit union, etc.
- The application can be viewed at the Treasury Dept website here. Make sure you are applying on a legitimate site; there are many scams right now.
There is no need to pledge any collateral for this loan.
There is no personal guarantee requirement for this loan.
No, if you obtain the SBA Payroll Protection Loan, you cannot also take the Employee Retention Credit or delay the deposit of employment taxes.
Economic Injury Disaster Loans & Loan Advances (EIDL)
Small businesses may be eligible for a loan of up to $2 million in assistance to help overcome the temporary loss of revenue due to COVID-19. They are also offering a loan advance of up to $10,000.
Any business with 500 employees or less, including sole proprietorships and independent contractors, may be eligible for EIDL assistance. You must have suffered substantial economic injury from COVID-19.