As we move towards the “new normal” and things gradually and carefully open up, I hope that everyone has stayed healthy (and sane) during these challenging times.
Previously, we wrote about some of the tax changes that were brought about due to the pandemic.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
An incentive to give …
Due to the Tax Cuts and Jobs Act (TCJA), Taxpayers who previously itemized deductions are now claiming the standard deduction instead. The TCJA has now doubled the standard deduction and suspended some itemized deductions for 2018 through 2025. The CARES Act however, authorizes an above-the-line deduction for donations of up to $300 in 2020, In other words, you get the deduction whether or not you itemize.
Haven’t received your Stimulus check? By June 2020, the CARES Act provided that more than 159 million Americans received a stimulus payment either by mail or direct deposit. However, there are still households that have not received their payment. In response, the IRS created “Get My Payment” an app that allows users to track the status of stimulus checks.
Beware of scams! During this time, more and more instances of COVID-related fraud are being reported. Be aware of calls from scammers posing as the IRS. The IRS will never call you or send communications via email and will only communicate via regular mail.
The IRS has extended the filing and tax payment deadline for your Federal Income Tax return to July 15, 2020. Your tax refund may be slightly larger due to the fact that the IRS has recently announced that it will pay interest on delayed refunds. Any individual income tax refunds paid after April 15th, 2020 will be paid with interest even though the tax filing deadline has been extended to July 15th . The Wall Street Journal's Richard Rubin noted, “the IRS is ‘paying for the privilege of holding on to the money since April 15,’ just as a taxpayer would pay the IRS if they owed money.” What this means to the tax filer is that “if your refund is issued between April 15 and June 30, you'll earn an annual 5% interest rate, compounded daily. If your refund is issued between July 1 and September 30, you'll earn an annual 3% interest rate, compounded daily.” The IRS statement, dated June 24, 2020, can be found here on the IRS website.
Small Business – Paycheck Protection Program
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. As originally enacted, SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
Congress recently passed H.R.7010 - Paycheck Protection Program Flexibility Act of 2020 which eases some of the rules for applying for loan forgiveness (and essentially converting all or some of the “loan”into a grant that does not have to be repaid). The “loan forgiveness covered period” has been extended from 8 weeks to the 24-week period beginning on the date your PPP loan is disbursed and provides other changes to the Act which eases some of the restrictions. You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Recently, the rules for other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program. SBA has released a frequently asked questions document which may be found here here.
A great place to search for a wealth of information on the CARES Act for small businesses can be found here here.
We’re here to advise on some of the latest developments and what they might mean to you!