Now that the bill has been passed that includes funding, tax relief and stimulus payments for businesses and individuals, understanding and navigating the language and applications can be a little confusing. I’m going to highlight a few of the main items that are at the top of the list. This does not cover everything. Consult with your Tax Advisor/Accountant for clarification of how it impacts your situation. Leave no money on the table, so explore all options and if you are in business, definitely check into the grants and loans available to cover loss of income. Our business is open, accepting new clients and available to serve you virtually during this time. We are accessible by phone, video chat or email. You may contact us for more information, tax preparation or consultation by booking an appointment HERE.
Taxes
- $1,200 stimulus checks per adult plus $500 for each child under the age of 17.
- No 10% early withdrawal penalty from retirement accounts up to $100k. Funds can be recontributed over three years or can keep the money and pay the tax on the withdrawals over a three-year period.
- No required minimum distribution from retirement plans in 2020 for ages 70 1/2 or older.
- Refundable employee retention tax credit up to $5k per employee for businesses with 100 or fewer employees. Larger employers also can claim the credit, but with more restrictions.
- Employers and self-employed individuals can delay the payment of the employer-portion of the FICA (Social Security) payroll taxes or one-half the SECA (self-employment taxes) until after 2020 – one half is due in 2021 and the other half in 2022.
Unemployment benefits
- Self-employed individuals, independent contractors, and other individuals qualify for unemployment who would not normally qualify (gig workers and freelancers).
- The unemployment assistance is available to individuals who are unemployed, partially unemployed, or unable to work for the weeks impacted as a result of COVID-19 between Jan. 27 – December 31, 2020.
- This benefit is extended to the maximum 39 weeks of assistance, where the amount is equal to what is authorized under the state unemployment compensation law, plus an additional $600 per week for up to four months.
Credit Reporting
- If creditors provide an accommodation and payments are made or if no payment is required, then the creditor must report customer as current.
- If the customer was delinquent before the accommodation, but brings account current, then the creditor must report customer as current.
- Creditors may maintain status of written off accounts.
- These provisions apply from January 30, 2020 to 120 days after enactment of this bill or the end of the national emergency.
Student Loans
- Suspends all payments/interest due on federal student loans for 6 months.
- For the purpose of loan forgiveness, loans will be deemed paid during the forbearance.
- Prohibits negative credit reporting or involuntary debt collection during forbearance period.
Small Business
- Businesses with 500 employees or fewer, including sole proprietors, independent contractors, and cooperatives are eligible for Economic Injury Disaster Loans (EIDL) up to $2M during the covered period of January 31st to December 31, 2020. Contact your business bank.
- The business must show hardship due to the Coronavirus.
- Personal guarantee on loan advances or loans under $200,000 waived.
- $10,000 forgivable advance available to small businesses for the Economic Injury Disaster Loan (EIDL).
- Economic Injury Disaster Loans may be used for the following:
- Paid sick leave to employees impacted by COVID-19
- Payroll
- Rent/Mortgage Payments
- Debt obligations due to loss revenues
- Increased costs for due to chain supply disruptions and materials.
