Coronavirus Update: CARES Act Tax Implications for Individuals & Businesses Revised

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Previously you received an email from us regarding the CARES Act Tax Implications for Individuals and Businesses. As the current situation is ever evolving we wanted to share with you a few updates to this guidance.

Remember, should you have questions on any of the information below please don’t hesitate to reach out to us at (844) 850-6166 or by clicking here. We are here to guide you.

Individual Provisions

  • Recovery Rebates (Refundable Tax Credit) – In addition to the information we sent out yesterday, please know the full rebate amount is available if you have income at or below $112,500 Head of Household (HOH).
  • Retirement Plans – In addition to the information we sent out yesterday, please know that for distributions, you can spread the income inclusion over a three year period.

Small Business Loan Provisions

  • Paycheck Protection Program (PPP) – In addition to the information we sent out yesterday, please know that as long as the employer maintains payroll, there is forgiveness available for the portion of the loans used to cover payroll costs, interest (not principal) on mortgage loans, utilities and interest on any other debt obligations incurred before the covered period, and paid during the first 8 weeks of the loan term.
  • No more than 25% of the loan forgiveness may be attributable to non-payroll costs.
  • Contract labor is not to be included in your payroll calculation as they will need to apply for themselves separately. Contract laborers may submit their PPP loan applications starting April 10, 2020.
  • Please note that any business that receives an Economic Injury Disaster Loan (EIDL) under Section 7(b) of the Small Business Act is still eligible for CARES’ “payroll protection” loans as long as purpose is not duplicated. If an EIDL was applied for or granted prior to the CARES Act, to cover payroll costs, the EIDL can be rolled into the PPP.

ADDITIONAL PERTINENT INFORMATION

  • Internal Revenue Service Deadline Extensions – In addition to the information we send out yesterday, please know the Internal Revenue Service (IRS) has issued an extended tax deadline from April 15, 2020 to July 15, 2020 for the 2020 1st Quarter Estimated Tax payments as well. Unfortunately this does not extend to the 2020 2nd Estimated Tax payments which are still due on June 15, 2020. 

Any advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.