Last week, President Trump signed the Families First Coronavirus Response Act. Congress is also working on an even newer Coronavirus relief bill. Federal income-tax payments can be deferred to July 15th.
What is already determined?
1.Taxpayers do NOT have to submit an extension with the IRS for the newly assigned deadline.
2. We know this clearly applies to individuals, trusts, estates, and corporations (if you use the calendar year for tax purposes).
What is to be determined?
A few things that can apply to most entrepreneurs:
1. We don’t know yet if filing deadlines for federal payroll tax returns and federal estate and gift tax returns for 2019 also are to be delayed.
2. We also don’t know if the normal April 15th deadline for making IRA and HSA (health savings account) contributions for your 2019 tax year will be delayed.
As for what the Act entails for small business owners?
Employees can be given the right to take up to 12 weeks of job-protected family leave. It also requires paid sick leave (Limited to 10 days or $5,110 total) as well as paid family leave.
The want to protect your employees, but the anxiety of how SUSTAINABLE that is without the business is strong with all of us…
There will be a refundable payroll tax credit equal to 100% of qualified emergency sick-leave AND family-leave payments made by the employer pursuant of the Act. (This credit can be taken between 4/2/20 until 12/31/20).
The credit is first applied as an offset of the Social Security tax components of federal payroll-tax bill. Any additional credit amount will be paid to the employer directly by the IRS.
Payments mandated by the Act are exempt from the 6.2% Social Security tax component of the employer’s federal payroll tax that normally applies to wages.
While the deadlines have been pushed, this isn’t the time to push your taxes to the bottom of the list.
That’s not to say that you need to hunch over your desk, cross checking every line of your return prepared by your CPA.
We get it. In a Black Swan Market event, you have A LOT to consider.
Which is why we’re here to mitigate the guess work of how COVID-19 can be accounted for in your financial picture.