Hot Topics
2020 Estimated Tax Payment Deadlines
Tax-Favored Withdrawals from Retirement Plans
Economic Injury Disaster Loan and Loan Advance
08/08/2020 – Executive Order – Payroll Tax Deferral
payroll protection program
What Can I Spend My PPP Money On?
families first coronavirus response act
Employer Paid Leave Requirements
- H.R. 6201, known as the Families First Coronavirus Response Act in Division E, requires employers to provide each employee paid sick time for specific reasons. A link to the law : https://www.congress.gov/116/bills/hr6201/BILLS-116hr6201enr.pdf The Department of Labor’s outline to be more helpful to explain the bill in more practical terms. https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
DOL Poster is now available:
https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Here is what the IRS published about this topic: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus
Filing and Payment Deadlines
2020 Estimated Tax Payment Deadlines
Quarterly ES Payment Due Date Changes for 2020 :
Typically, quarterly estimated tax payments are due April 15, June 15, September 15, & January 15.
April 15, is extended and due by July 15.
June 15, September 15, & January 15 remain due on those dates.
IRA and HSA Contribution Deadlines for 2020 :
Typically, these payments are due by April 15, 2020 for the contributions to be deductible for the 2019 tax year.
This April 15, is extended and these payments are due by July 15.
Source: https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers
TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS
Potential 3 Year Indirect Rollover Period and 10% Penalty Avoidance on Qualifying Distributions from Retirement Plans – H.R. 748 SECTION 2202
10% Penalty for early withdrawal {I.R.C. §72(t)} shall not apply to COVID-19 related distributions
COVID-19 related distributions are :
1) distributions not exceeding $100,000 between January 1, 2020 and before December 31, 2020
AND
2) to an individual with a SARS-CoV-2 diagnosis for the individual, the spouse, or dependent,
OR
3) to an individual who experiences adverse financial consequences as a result of :
- being quarantined,
- being furloughed or laid off, or having work hours reduced due to such virus
- being unable to work due to lack of child care due to such virus
- closing or reducing hours of business owned by the individual due to such virus
You can choose to include this distribution in your income ratably over a three year period and it is not subject to the the 10% early distribution penalty.
Alternatively, you may contribute back the entire amount withdrawn, in one or more contributions, over the THREE year period starting with the date you received the first distribution and it will be treated as an indirect rollover of those funds if they were an IRA or as a trustee to trustee transfer if it was another eligible employer retirement plan.
Source : H.R. 748 Section 2202, pages 157 – 167
Paycheck Protection Program – Small Business Loans for Covering Payroll, Rent, Interest on Debt and Utilities
Paycheck Protection Program – Small Business Section 7(a) Loans
Loans Made between February 15, 2020 and June 30, 2020
SBA information regarding the Payroll Protection Program
YOU WILL APPLY FOR THIS LOAN THROUGH PARTICIPATING LENDERS BEGINNING APRIL 3, 2020. THE LOAN IS AVAILABLE THROUGH JUNE 30,2020.
- WHO: Entity or Eligible Individual – includes sole proprietors, independent contractors and eligible self employed individuals.
- Maximum Loan: 2.5 x the Average Monthly Payroll Costs for the preceding 12 months
- Allowable uses of Loan Proceeds:
I) Payroll Costs,
II) Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave and insurance premiums
III) Employee Salaries
IV) Payments of interest on any mortgage obligation
V) Rent
VI) Utilities including electric, water, gas, telephone, internet
VII) Interest on any other debt obligation that were incurred before the covered period
- Maximum Interest Rate is 4%. Prepayment penalties are waived. – SBA UPDATE – 2 year loan with an interest rate of 1.0%
- Non-recourse if it is used for the allowable uses defined above.
- Automatic 6 month deferral for those businesses in operation February 15, 2020 and with an application that is approved or pending on or after March 27, 2020.
- Participating Banks will be paid on a sliding scale.
- Banks are paid by the SBA = 5% of the funded loan not more than $350,000.
- Banks are paid by the SBA = 3% of the funded between $350,000 and $2,000,000
- Source: H.R 748 Section 1102 Paycheck Protection Program, Pages 9-32
08/08/2020 – Executive Order – Payroll Tax Deferral
Payroll Tax Deferral – 6.2% Employer and 6.2% Employee
Effective For Payroll Paid Between 9/1/2020 and 12/31/2020
You will not have to withhold, deposit or pay either portion of the Social Security Tax (OSADI) for employees whose wages are less than $4,000 on a biweekly payroll or equivalent amount with respect to other pay periods.
At the moment, IT IS JUST A DEFERRAL, however, the Order states:
“The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”
Executive Order: https://www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/
Economic Injury Disaster Loans and Loan Advance
Small Business Working Capital Loans
Loans Made between February 15, 2020 and June 30, 2020
- ECONOMIC INJURY DISASTER LOANS AND LOAN ADVANCE
- Be sure to click the button that says ask for the $10,000 ADVANCE
Click on the link at the top of the page that says “Economic Injury Disaster Loan” at
https://www.sba.gov/funding-programs
- OR
- Copy and paste this address directly in your browser: https://covid19relief.sba.gov/#/