In the midst of a pandemic, we know that taxes are likely the last thing you want to think about. But in unprecedented and somewhat frightening times like these, tax legislation is one of the most frequently used tools for economic stimulus. So let us extend some peace of mind with these 2 recent developments:
Tax Payment Deferral
You’ve likely heard something about it by now, but let us make sure you understand the facts (and not the rumors). Following President Trump’s declaration of a national emergency, Treasury Secretary Steven Mnuchin announced on March 17, 2020 that individuals can defer tax payments of up to $1 million for 90 days without any assessment for penalties or interest. Corporations can defer up to $10 million of tax payments for that same 90 days. The $1 million limit for individuals was enacted as a clear attempt to provide relief to small businesses in this trying time.
Please note – this did not extend the deadline for filing your tax return!
While we’re still awaiting more details and guidance, there has not yet been any extension to the April 15, 2020 filing deadline. The Treasury Secretary’s language may have provided some insight as to what’s still to come, in that he encouraged people to still file by the traditional deadline (especially those in a position of getting a tax refund). At this time however, there has been no official change to the filing deadline.
What is clear at this point: you will not be charged interest and penalties on payments made within the 90-day deferral period, giving you until July 15, 2020 to pay any remaining balance due on your 2019 tax return.
With many of the details still unclear and no official written guidance yet, we will continue to monitor this issue and update you as we know more.
Employer Tax Credits
In addition to the tax payment deferral, the House unanimously passed on March 16, 2020 an updated version of the coronavirus relief bill that they originally passed on March 14. The bill, H.R. 6201, the Families First Coronavirus Response Act, provides paid leave benefits to employees, tax credits for employers and self-employed taxpayers, and FICA tax relief for employers.
It also increases unemployment insurance and guarantees that Americans can get free diagnostic testing for COVID-19.
The bill allows for tax credits for employers to offset compensation paid for sick/family/medical leave, subject to some limitations. It also provides that these payments will not be considered wages and, thus, will not be subject to the 6.2% Social Security tax. A credit will be available to offset the 1.45% medicare/hospital insurance portion of the FICA tax.
The bill also extends the definition of paid family and medical leave to parents whose children’s care facilities or schools are shut down.
To learn how this specifically impacts you or your business, please get in touch with us at the links below.
How can we help?
At Culpepper CPA, we are continuing to monitor the ongoing developments of the COVID-19 crisis and the challenges it presents. While our office remains open for the time being, we understand the hesitation many people have about visiting public places at this time. Please take advantage of our resources – including our Secure Client Portal, email, regular mail, and telephone (865-691-8509) – as we all work together to protect each other against this pandemic.