Gress Income Tax Service

CARES Act (Stimulus Agreement)

President signs stimulus bill (03-27-20)

Stimulus Payment (Rebate)

  • Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) .  If your income is over 99,000 single or 199,000 for MFJ then you do not qualify.   They will be using 2019 income if you already filed and 2018 income if you have not.   We are waiting for more details from the IRS to how this will be applied as we are in the middle of filing season.
  • The IRS has not confirmed an actually delivery date of these payments.  The Treasury has stated that they want it to be delivered by direct deposit (based off prior tax filing), or by check if direct deposit is not available. 

Also, in response to the questions we’ve had about the amounts of the stimulus checks individuals will receive, here is a helpful link to compute the payments:

http://www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php

The CARES Act provides for Payroll Protection loans of up to $10 million to COVID-19 impacted businesses. The loans:

Are guaranteed 100% by the Small Business Administration (no personal guarantees or collateral required);

Must be taken out between February 15, 2020, and June 30, 2020;

May be forgiven for amounts used to cover basic operating expenses such as payroll costs, rent and mortgage, and utilities for up to two months from the loan origination date (excluded from COD income); and

Have a maximum maturity rate of 10 years and 4% interest if not forgiven.

For your reference, here is a list of CARES Act tax provisions:

Deferral of 50% of an employers' payroll tax deposits for 2020 (with 50% of deferred amount due by December 31, 2021, and 50% due by December 31, 2022);

A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;

The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;

A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;

Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);

A temporary waiver of RMD requirements in 2020;

Increased individual and corporate charitable contribution deductions for 2020;

The deferral of excess business loss limitations until 2021;

Deferral of an employer's 2020 minimum contributions to its single-employer defined benefit pension plan until January 1, 2021;

An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;

An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;

The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and

A COD exclusion of small business Payroll Protection loans forgiven under the Act.

The full text of the CARES Act is available at:

http://www.congress.gov/bill/116th-congress/house-bill/748/text

How to get money fast for paid leave and employee retention credits (04-01-20)

The IRS has provided two different procedures to get money into employers' hands quickly who are claiming credits for paid sick or family leave benefits or employee retention credits. Employers may claim credits against their 6.2% OASDI taxes for:

  • 100% of their employer-paid sick leave and employer-paid family leave benefits paid under the Families First Coronavirus Response Act (FFCRA) to qualified employees for leave taken after March 31, 2020, through December 31, 2020; and
  • The new Employer Retention Credit of 50% of qualified wages paid to employees, up to a $5,000 maximum credit for wages paid after March 12, 2020, and before December 31, 2020.
  • https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Rather than wait weeks after the employer has filed its quarterly Form 941, the IRS has set up two alternative ways employers can cash in these credits quickly:

  • They can retain the following employment taxes rather than depositing them:
    • Federal income taxes withheld for all employees;
    • The employee's share of Social Security and Medicare taxes (but only for the employee who received the paid benefits or qualified wages); and
    • The employer's share of Social Security and Medicare taxes for all employees; or
  • Alternatively, employers may file Form 7200, Advance Payment of Employer Credits Due to COVID-19, to expedite a refund of the credit due in excess of the amount of previously retained employment taxes. The IRS has stated that they will try to issue refunds within two weeks.

Form 7200 may be filed for an advance payment of the credits anticipated for a quarter at any time before the end of the month following the quarter in which the employer paid the qualified wages. If necessary, it can be filed several times during each quarter.

Submit Form 7200 by faxing it to (855) 248-0552.

Form 7200 is available at:

www.irs.gov/forms-pubs/about-form-7200