Coronavirus Assistance Checklist Oct. 21, 2020

From the Pinnacle CPA Advisory Group, a KM&M CPAs affiliate —

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 and 2nd quarter 2020 federal estimates

Penalties and interest are waived for this 90 day period

Includes individual, trust, gift tax, and C corporation returns that were due 4/15/20 – 7/15/20

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 adjusted gross income (AGI) ≤ $75,000 receive $1,200

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

Head of households with AGI ≤ $112,500 receive $1,200

Parents with children under age 17 receive $500 / child

Phase-outs occur for individuals from $75,001 – $99,000 (head of household from $112,501 – $136,500)

Phase-outs occur for married couples from $150,001 – $198,000

Rebate is reduced by $5 for each $100 that exceeds the above AGI

Income is based on 2018 return unless 2019 return is filed

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

National Economic Impact Day is 11/10/20. You must register by 11/21/20. See address below.

Rebate is not subject to tax

Receive even if you don’t file a return as long as you have a SSN and are not claimed by someone else

Get My Payment – IRS website tool for payment status information and entering direct deposit information

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 through 7/31/2020 (in addition to state benefit). A presidential executive order lowered and extended to $400 / week from 8/1/2020 – 12/6/20 paid 75% federal and 25% state

Maximum of 39 weeks for combined federal and state assistance. Added 13 more weeks.

Self-employed and independent contractors would be eligible

Retirement Account Withdrawals:

Required minimum distributions (RMD) for 2020 can be waived (even inherited IRA’s)

10% penalty is waived on up to $100,000 distributions (must be used for Corona related purposes)

Started 1/1/20

It can be repaid within 3 years from the date received; or

It is taxed over 3 years (2020 – 2022) or you can elect out and pay all the tax on the 2020 tax return

Student Loans Held by the Dept. of Education:

All payments can be suspended through 9/30/20. Extended to 12/31/20.

0% interest will accrue

Federally Backed Mortgage Loans such as FNMA and FHLMC:

180 day forbearance can be requested by the borrower. An additional 180 days was added.

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 but the employee can use vacation, personal, medical or sick leave benefits

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

The aggregate maximum is 10 weeks and $10,000

Self-employed qualify up to 50 days at $200 / day ($10,000 maximum)

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

Self-employed qualify up to 10 days at $200 / day ($2,000 maximum)

Qualified Family or Sick Leave General Rules:

Administered by the Department of Labor

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 (prior year net earnings divided by 260 days)

This can be claimed even if you received a PPP loan

Small Business (generally < 500 employees) Loans (Paycheck Protection Program) ($649 Billion):

Covers employee and owner payroll costs

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

Eligible if in operation on 2/15/20

Sole proprietors and independent contractors (self-employed) are eligible and use net Income from self-employment

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

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

Employees have qualifying costs up to $100K with an 8 week max of $15,385 and a 24 week max of $46,154

Owners have qualifying costs up to $100K with an 8 week of $15,385 and a 24 week max of $20,833

Those having a principal residence outside the US do not qualify

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

8/8/20 is last day to apply or receive a loan but it is first come first serve…move quick!!!

Loan is 2.5 * monthly payroll costs (2019) (special seasonal and industry rules) up to $10 million

Interest at 1% loan

Loans issued before 6/5/20 have a 2 year maturity and loans issued starting 6/5/20 have a 5 year maturity

Payments will be deferred for a minimum of 6 months from date of loan disbursement

No collateral, personal guarantees or recourse to owners

Funds should be used during the covered period in the 8 or 24 weeks after loan origination (loan can be forgiven in whole or part)

Loan principal is forgiven for proceeds used over an 8 or 24 week period for qualified costs listed above

The 8 or 24 week period begins on the date of the loan origination

Expected forgiveness is the amount lender expects borrower to expend

At least 60% of the loan must be used for payroll costs to have full forgiveness

Amount forgiven is reduced if FTE headcount or salaries decrease (↓ >25% during covered period compared to 1/1/20 – 3/31/20)

Start gathering monthly payroll (W-2’s and 941’s) and self-employed information (Sch. C and bank statements) for 2019

Applicant must submit SBA Form 2483 to the bank and whatever forms the bank requires (varies by bank)

Applicant may be able to use shortened SBA Form 3508 EZ (check this first!)

Applicants with less than $50K of PPP loan proceeds can use SBA Form 3508S…easiest

Expenses related to tax exempt PPP loans are not deductible (per IRS notice) (Congress is talking about making this exempt)

There is a really good calculator at the website below

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

Emergency advance (grant) up to $10,000 within 3 days of applying (have not seen any of these after weeks)

Up to $2M in loans (amounts over $10,000 are loans at 3.75% for up to 30 years) (Non-profits get 2.75%)

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 (new 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

Payroll Tax Payment Delay

Employers and self-employed

6.2% matching money

3/27/20 – 12/31/20

Pay ½ by 12/31/21 and ½ by 12/31/22

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 & COVID care providers

Many government branches

Education

Ohio Considerations:

Ohio and most Ohio cities have 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

Proactively call lenders and work out payment arrangements

Stay safe!!!

LINKS TO SOME HELPFUL REFERENCES:

Coronavirus Aid Relief and Economic Security Act (CARES Act) (3/27/20)

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

IRS People First Initiative

Loan Forgiveness Details

SBA emergency $10K advance for EIDL

IRS Interim Final Rule

DOL Q & A

SBA EIDL Loans

SBA Paycheck Protection Program