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Latest Update – Tax Filing Deadline Extended and More

by Tracey Hrica, EA Mar 20, 2020 | Share

To start with, we at Century wish the best for you and your families during this unprecedented time.  We promised to keep you up to date with the latest news regarding income and tax matters. The Families First Coronavirus Response Act was signed into law late Wednesday, so I will update you on that, but I want to touch on a few other areas first.

When we last reported, the tax filing deadline had not been extended past April 15th – only the deadline to pay any tax due was extended to July 15th.  However, according to Treasury Secretary Steven Mnuchin, all taxpayers and businesses will now have the additional time to file as well. Officially, the April 15th filing deadline has been moved to July 15th.

Our advice:  Between 70-80% of taxpayers receive a refund! If you find yourself struggling financially due to the COVID-19 outbreak, filing your tax return quickly could provide some relatively immediate relief.  Worst case scenario is that you owe, but no penalty or interest will be assessed until after July 15th.

Now for the Families First Coronavirus Response.  I will provide a link at the end that will take you to the House Appropriations Committee’s summary as well as the text version of the actual bill, if you would like to read it yourself.  Below is a summary of the most relevant information:

  1. The new law does not include a payroll tax cut, stimulus checks, or other tax relief provisions. Congress is currently working on the “phase-three” bill that will address these items.
  2. The Emergency Family and Medical Leave Expansion Act (Division C of the bill), requires employers with fewer than 500 employees to provide public health emergency leave under the Family and Medical Leave Act, when an employee is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency related to COVID-19. Employers with fewer than 50 employees MAY be exempted from the requirement. I say may because this is the exact wording in the bill: “to exempt small businesses with fewer than 50 employees from the requirements of section 102(a)(1)(F) when the imposition of such requirements would jeopardize the viability of the business as a going concern.” My question is – what are the determining factors for “jeopardizing the viability of the business”?
  3. To offset this expense for the employer, the bill provides an employer payroll tax credit that equals 100% of the qualified family leave wages paid by the employer. The credit is available for eligible wages paid during a period that begins on a date starting on a date within 15 days of enactment (to be designated by Treasury) and through Dec. 31, 2020. If an employer claims the credit, the employer’s gross income will be increased by the amount of the credit
  4. The Emergency Paid Sick Leave Act requires employers with fewer than 500 employees to provide up to 80 hours of paid sick time through the end of this year if the employee is unable to work due to being quarantined or self-quarantined or having COVID-19 or because the employee is caring for someone who is quarantined or self-quarantined or has COVID-19 or if the employee is caring for children whose school has been closed because of COVID-19 precautions. Again, employers with fewer than 50 employees MAY be exempted from the requirement, and there is a 100% payroll tax credit available for employers, which will be counted as income if the credit is taken.
  5. The bill also provides refundable credits for self-employed individuals that would be entitled to receive paid leave under the Emergency Paid Sick Leave Act if the individual were an employee.

Congress and the administration are still hashing out details for the stimulus package that among other things could send checks worth as much as $1200 to qualifying individuals.  In the latest updates, the gross income threshold amounts they are considering to start phase downs are $75,000 for individuals, and $150,000 per couple.  Additionally, there could be $500 payments for each child. The rebate would be reduced to zero for single taxpayers with incomes exceeding $99,000 and $198,000 for joint filers.  Income would be based on a taxpayers’ 2018 tax return.

Finally, for businesses in need of immediate assistance, over 20 states have been declared eligible for the SBA Economic Injury Disaster Loan Program late yesterday.  Follow this link for more information: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. In addition to the SBA loan application, be prepared to supply tax returns, current financial statements including a profit and loss statement and balance sheet, and monthly sales figures.

Now more than ever having a partner in Century Accounting is critical in trying to navigate in world changing by the hour.  We are always here to answer your questions, offer advice, and provide you the documents and assistance in applying for loans, rental negotiations and tax filings.  As promised, here is a link to the latest bill summary and transcript. https://www.govtrack.us/congress/bills/116/hr6201/summary#oursummary

About the Author

Tracey Hrica, EA

Tracey Hrica joined the firm in 1995. She is an Enrolled Agent(EA), which enables her to prepare personal and business tax returns and represent clients before the IRS. Working closely with her clients, Tracey’s primary areas of concentration are new client set up and QuickBooks support. As a QuickBooks ProAdvisor, she works closely with clients who rely on QuickBooks for the day to day running of their business. Tracey has expertise in both QuickBooks Desktop and QuickBooks Online.

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