We have been closely monitoring the developments of the Coronavirus (COVID-19) and are seeing how it has and will continue to impact nearly every aspect of our lives.
As always, our first priority is to protect the health of our clients, employees, their families, and those in our community.
In order to do our part in slowing the spread of COVID-19 and to protect our community, we have decided to temporarily close our office building until further notice. We are continuing to provide all services for our current clients, including tax services, remotely. We understand that refunds are more important than ever for our community, and we are here to assist you in any way we can. At this time, we are no longer accepting new clients until the end of May.
For tax services, if you haven’t provided the tax sources to our office yet, we are asking our clients to UPLOAD ALL DOCUMENTS. As our staff is working remotely, our office will no longer be accepting drop-offs or mailed documents postmarked after 03-19-20.
You can upload files (Pdf, word or excel) via our secure link: Click here to upload files.
When the return is ready, we can schedule another phone/web meeting to address any questions you may have. (Current turnaround is 3 weeks upon receiving.)
Our Firm’s Policy on Assisting SBA EIDL and PPP Loan Applications
As our office is experiencing high volume of inquiries and requests related to SBA EIDL and PPP applications, please understand that we will do our best to respond as promptly as possible. For a service fee, we are happy to assist our clients with the following:
- Preparation and submittal of the initial SBA EIDL online application (for up to 10k advance)
- Preparation of SBA EIDL’s supporting and other required forms
- Preparation of the PPP application and other supporting forms as required by your bank
For service inquiries or questions, please contact us via email: email@example.com
If you are self-preparing for the EIDL application, follow the online application instructions on the SBA website: Click here for the online application.
Confused about the difference between EIDL and PPP and if one or both loans are right for you? Check out this useful comparison chart.
As information is changing rapidly, we will continue to provide updates and make changes as needed. If you have questions, be sure to reach out to us. Our entire team is here to support and guide you. Thank you for the privilege of serving you.
Alisa Na, CPA
DISCLAIMER: This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
Direct links to calculate your stimulus payment, PPP and EIDL loan applications, and other SBA forms for those who are self-preparing
Key points of the CARES Act for Businesses and the Paycheck Protection Program (PPP)
Key points of the CARES Act for Individual taxpayers
Updated tax announcement, including FAQs from the IRS website
Summary of SBA’s disaster recovery loan program, including Economic Injury Disaster Loan (EIDL)
Summary of updates to FMLA
WA State Updates
Links to resources for WA state and local relief efforts
- Stimulus check information
- Calculate your stimulus payment
(Note: If your 2019 tax return has been filed, your AGI is on line 8b of your 2019 1040. If you’ve not filed yet, use your 2018 return. Your AGI on the 2018 1040 is on line 7)
- Check on the status of your Economic Impact Payment
- Calculate your stimulus payment
- Treasury website’s CARES Act page which includes:
- Covid-19: Economic Injury Disaster Loan Application (EIDL):
- SBA Form 413 – Personal Financial Statement
- Form 4506-T – for business, personal and any related businesses
- SBA Form 2202 – Schedule of Liabilities
CARES Act for Businesses
March 29, 2020
The following represents a summary of the recently signed into law CARES Act—also referred to as the Stimulus Package. Specifically, we are providing a summary of the Paycheck Protection Program.
Title 1 of the CARES Act, entitled “Keeping American Workers Paid and Employed Act,” provides relief for small businesses and their employees who are adversely affected by the COVID-19 outbreak. The key provision in this Act is the Paycheck Protection Program—an emergency lending facility to provide small business loans on favorable terms to borrowers impacted by the current economic state.
PAYCHECK PROTECTION PROGRAM – KEY POINTS
Starting April 3, 2020, small businesses and sole proprietorships can apply for the Paycheck Protection Program (PPP) loan through existing SBA lenders. Starting April 10, 2020, independent contractors and self-employed individuals can apply for the PPP loan through existing SBA lenders. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
You can apply for the Paycheck Protection Program by downloading the form: Click here to download.
You will need this form filled out when applying to participating SBA lenders.
The following offers highlights of the Paycheck Protection Program that small business owners need to be aware of and consider as they move forward:
- Available to businesses with 500 employees or less.
- Loan period ranges from March 15, 2020 through June 30, 2020.
- Loan amount equates to 2.5 times average monthly payroll expenses from 2019—up to $10 million.
- Loan interest is rate capped at 4%.
- Loan duration is a maximum of 10 years.
- Loan forgiveness is available—A borrower is eligible for loan forgiveness equal to the amount spent on the following items, during the eight-week period beginning on the loan origination date:
- Payroll costs
- Mortgage interest incurred in the ordinary course of business
- Rent paid based on a leasing agreement
- Payments for utilities—including electricity, gas, water, transportation, telephone or internet
- Additional wages paid to tipped employees
Note: The loan forgiveness amount can be reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
- Collateral is not required to secure the loan.
- No personal guarantee is required to secure the loan.
- Loan repayments are automatically deferred for six months and up to one year. This includes interest, fees and loan principal.
- Payment Protection Program loans are applied for through approved banks. The SBA may administer some loans based on viability.
- For businesses that have been denied SBA loans previously, lending requirements are more lenient.
You can go to the U.S. Department of the Treasury website for more detailed information on the Paycheck Protection Program: Click here for the website.
CARES ACT – ADDITIONAL KEY POINTS
Employee Retention Payroll Tax Credit
- The Employee Retention Payroll Tax Credit cannot be used in conjunction with the Payroll Protection Program or any other loan where payroll costs are forgiven.
- Employee retention credit is equal to 50% of the qualified wages paid, but cannot exceed $10,000 per employee.
- The employer’s gross receipts must be 50% or less than the same calendar quarter in 2019 to qualify.
- For employers with 100 or less employees, qualified wages are defined as wages paid for all employees during the period—whether they were able to work or not. For employers with 100 or more employees, qualified wages are defined as wages paid to employees not providing services.
Deferral of Employer Social Security Taxes
The deferral of employer social security taxes cannot be used in conjunction with the Payroll Protection Program. This allows an employer to defer their portion of Social Security taxes from March 27, 2020 to January 1, 2021. 50% is due by December 31, 2021 and the remainder by December 31, 2022.
This allows employers to expense qualified improvement property under the section 168 bonus depreciation rules.
CARES Act for Individuals
March 28, 2020
The following represents a summary of the recently signed into law CARES Act—also referred to as the Stimulus Package.
RECOVERY CHECKS – KEY POINTS
Recovery check distribution amounts—Single taxpayers will receive $1,200 and joint taxpayers will receive $2,400. There is an additional $500 for each qualifying child.
The recovery check is considered a credit for 2020, but paid in advance.
The amount is reduced (but not below zero) by 5% of each dollar a person’s adjusted gross income (AGI) exceeds. Consider the following:
- Married filing joint: $150,000 (AGI over $198,000 does not qualify)
- Head of household: $112,500 (AGI over $146,500 does not qualify)
- Single: $75,000 (AGI over $99,000 does not qualify)
Consider the following example:
- A married couple with no children has an AGI of $190,000.
- $190,000 is $40,000 above the $150,000 amount shown above.
- The couple’s check is reduced by 5% of $40,000, which is $2000.
- Therefore, they would receive a check for $400. (i.e., $2400 – $2000 = $400)
Check out the calculator posted on the Washington Post website to calculate your stimulus payment amount: Click here for the calculator.*
*Note that the calculator was created based on the figures from the CARES Act.
Other key details for recovery check eligibility include:
- Nonresident aliens are not eligible for the rebate.
- If a taxpayer has an outstanding debt (which the IRS would typically offset a refund by paying that debt), recovery dollars will not be used to offset that debt.
- Amount will be direct deposited into the account on the last filed return. Every taxpayer will receive a letter indicating their recovery check was dispersed. If the letter is not received, there will be a specific phone number to call to have the check re-issued.
- AGI will be accessed from 2019 returns if filed at the time of determination. Otherwise, 2018 returns will be used. Taxpayers who have not filed a return will not receive a check unless they did not file because they only have SSA-1099 or RRB-1099 (social security). The Treasury Department will review those forms for 2019 and issue the appropriate amount via check.
UNEMPLOYMENT – KEY POINTS
Any employee who was furloughed or part of a layoff is eligible for state unemployment. Details are as follows:
- Unemployment amount via the state typically ranges from 30-50% of the standard wage, depending on the state.
- The amount a person will receive for unemployment over four months will be the amount the state would already provide, but increased by $600 per week through July 31, 2020. For example, if a person is eligible for $300 weekly, they will receive $900 per week over four months or through July 31, 2020, whichever comes first.
- If an employee is already unemployed due to COVID-19, the $600 weekly additional payment will be paid retroactively.
- Self employed individuals, independent contractors, and gig workers are eligible for unemployment under this program.
RETIREMENT DISTRIBUTIONS – KEY POINTS
Ability to withdraw up to $100,000 retirement in 2020 for COVID-19-related purposes without 10% penalty—The distribution is taxable over a 3-year period unless electing to pay it back within 3 years. This essentially equates to a loan unless it is not paid back within the 3-year timeframe. This rule applies to individuals:
- Diagnosed with COVID-19
- Who have family (spouse or dependent) who have been diagnosed with COVID-19
- Who have adverse financial consequences in relation to COVID-19
- Who include the distribution in taxable income (unless they elect the 3-year payback)
Waived required minimum distributions (RMD) from individual retirement accounts—The required minimum distribution for 2020 has been waived.
This also applies to retirees who turned 70 1/2 in 2019 and are required to take their RMD by 4/1/20. If the retiree that turned 70 1/2 in 2019 still intends to take their RMD, this must happen by April 1, 2020—otherwise, the same penalty for late withdrawal will be applied.
This waiver does not apply to inherited IRA’s.
CHARITABLE CONTRIBUTIONS – KEY POINTS
Above-the-line charitable contribution—For tax year 2020, if a taxpayer does not itemize deductions, they can deduct up to $300 in addition to standard deduction for cash charitable contributions (no stock contributions).
Charitable contribution limitation by AGI—The 60% adjusted gross income limitation has been removed for 2020 (other than from donor advised funds).
Tax Update Announcement
April 10, 2020
IRS extends additional federal tax deadlines to cover individuals, trusts, estates, corporations and others
Last month, the IRS announced that taxpayers have until July 15, 2020 to file and pay federal income taxes (originally due on April 15, 2020). On April 9, 2020, the IRS expanded this tax relief effort to additional returns, tax payments and other actions.
As a result, extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020 and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extension. This means that anyone, including Americans who live and work abroad, can now wait until July 15, 2020 to file their 2019 federal income tax return and pay due taxes.
Estimated tax payments
Additionally, any individual or corporation with a quarterly estimated tax payment due on or after April 1, 2020 and before July 15, 2020, can wait until July 15, 2020 to make a payment—without penalty. This means that estimates normally due June 15, 2020 are now due one month later on July 15, 2020.
Extension of time to file beyond July 15
Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension to October 15, 2020.
Note: This is an extension to file the tax return. It is not an extension to pay taxes owed. Taxes owed are still due by the July 15, 2020 deadline.
Below, you will find a list of frequently asked questions in reference to the Internal Revenue Service’s (IRS) Notice 2020-18 (PDF). In this Notice, the Treasury Department and the IRS announced special Federal income tax return filing and payment relief in response to the ongoing COVID-19 emergency.
You can review the IRS page for additional information: Click here for the IRS page.
FREQUENTLY ASKED QUESTIONS
Question 1: Who is eligible for relief under the Notice?
Answer: Any person with a Federal income tax return or payment due on April 15, 2020 is eligible for relief under the Notice. “Person” includes any type of taxpayer such as an individual, a trust, an estate, a corporation or any type of unincorporated business entity. The payment due refers to both 2019 Federal income tax payments (including payments of tax on self-employment income) and 2020 estimated Federal income tax payments (including payments of tax on self-employment income)—regardless of the amount owed. The return or payment must be due on April 15, 2020—this relief does not apply to Federal income tax returns and payments due on any other date.
Question 2: Do I have to actually be sick, quarantined or have any other impact from COVID-19 to qualify for payment relief?
Answer: No, you do not have to be sick, quarantined or have any other impact from COVID-19 to qualify for relief. You only need to have a Federal income tax return or payment due on April 15, 2020 as described above.
Question 3: I am a fiscal year filer. My Federal income tax return for fiscal year 2019 is due on April 15, 2020. Am I an “Affected Taxpayer” eligible for relief under the Notice?
Answer 3: Yes, the relief provided in the Notice applies to Federal income tax returns and payments in respect of an Affected Taxpayer’s 2019 taxable year and postpones those 2019 return filings and payments due on April 15, 2020 until July 15, 2020. If your Federal income tax return for your fiscal year ending during 2019 is due on April 15, 2020, whether that is the original due date or the due date on extension, your due date is postponed to July 15, 2020.
Question 4: Does this relief apply to state tax liabilities?
Answer: No, this relief applies only to Federal income tax payments. State filing and payment deadlines vary and are not always the same as the Federal filing and payment deadline. We urge you to check with your state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.
Question 5: I haven’t filed my 2019 income tax return yet (that would have been due on April 15), but I expect to file it by July 15. What do I need to do?
Answer: Nothing, except file and pay any tax due with your return by July 15. You don’t need to file any additional forms or call the IRS to qualify for this automatic Federal tax filing and payment relief. If you expect a refund, you are encouraged to file your return as soon as you can so that you can receive your refund. Filing electronically with direct deposit is the quickest way to get refunds. If you need more time beyond July 15 to file your return, request an automatic extension of time to file as described next.
Question 6: What if I am unable to file my 2019 income tax return (that would have been due on April 15) by July 15, 2020?
Answer: If you are an individual, you can request an automatic extension to file your Federal income tax return if you can’t file by the July 15, 2020 deadline. The easiest and fastest way to request a filing extension is to electronically file Form 4868 through your tax professional, tax software or using the Free File link on IRS.gov. Businesses, including trusts, must file Form 7004.
You must request the automatic extension by July 15, 2020. If you properly estimate your 2019 tax liability using the information available to you and file an extension form by July 15, 2020, your tax return will be due on October 15, 2020. To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request.
Question 7: I already filed my 2019 income tax return (that would have been due on April 15) and I owe taxes, but I haven’t paid yet. What do I need to do to avoid interest and penalties?
Answer: To avoid interest and penalties, pay your taxes in full by July 15, 2020. If you filed Form 1040 or Form 1040-SR, the tax payment amount can be found on line 23. If you filed Form 1040-NR, the tax payment amount can be found on line 75. For a corporation filing Form 1120, the tax payment amount can be found on line 35.
Interest and penalties will begin to be charged after July 15 for any amount remaining unpaid by that date.
Question 8: I already filed my 2019 income tax return that would have been due on April 15 and scheduled a payment of taxes for April 15, 2020. Will this payment be automatically rescheduled to July 15, 2020?
Answer: No, the payment will not be automatically rescheduled to July 15, 2020. If you do nothing, the payment will be made on the date you chose. Here is information on how to cancel and reschedule your payment:
- If you scheduled a payment through IRS Direct Pay, you can use your confirmation number from the payment to access the “Look Up a Payment” feature. You can modify or cancel a scheduled payment until two business days before the payment date. The email notification you received when you scheduled the payment will contain the confirmation number.
- If you scheduled a payment through the Electronic Federal Tax Payment System (EFTPS), click on “Payments” from the EFTPS home page, login, click “Cancel a Tax Payment” from the left menu and follow the instructions. You must do so at least two business days before the scheduled payment date.
- If you scheduled a payment as part of filing your tax return (authorizing an electronic funds withdrawal), you may revoke (cancel) your payment by contacting the U.S. Treasury Financial Agent at 888-353-4537. You must call to make a payment cancellation request no later than 11:59 p.m. ET two business days prior to the scheduled payment date.
- If you scheduled a payment by credit card or debit card, contact the card processor to cancel the payment.
Question 9: The Notice postpones the deadline for first quarter 2020 estimated income tax payments due on April 15, 2020. What about second quarter estimated tax payments due on June 15? Have they been postponed as well?
Answer: No, second quarter 2020 estimated income tax payments are still due on June 15, 2020. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020.
Question 10: Does this relief provide me more time to contribute money to my IRA for 2019?
Answer: Yes. Contributions can be made to your IRA for a particular year at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, 2020, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020. For more details on IRA contributions, see Publication 590-A – Contributions to Individual Retirement Arrangements (IRAs).
U.S. Small Business Administration (SBA) offering disaster assistance in response to COVID-19
ECONOMIC INJURY DISASTER ADVANCE LOAN (EIDL)
March 30, 2020
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan (EIDL) advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. This loan advance will not have to be repaid.
Other Coronavirus Assistance
The SBA provides a debt relief to small businesses as they overcome the challenges created by this health crisis.
LOW-INTEREST FEDERAL DISASTER LOANS
March 21, 2020
Under the recently enacted Coronavirus Preparedness and Response Supplemental Appropriations Act (the Act), small businesses that have suffered substantial economic injury as a result of COVID-19 can apply for low-interest federal disaster loans through SBA. Small businesses and nonprofits can apply for working capital loans of up to $2 million.
We’ve highlighted the following key details of the Act for you here, but you can also learn more by visiting the COVID-19 disaster assistance page: Click here for more information on SBA’s website.
- State governors must first request access to the Economic Injury Disaster Loan program. Once the declaration is made, information on the application process for disaster loan assistance will be made available to affected small businesses within the given state.
- Loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofits.
- Loans can be used to cover accounts payable, debts, payroll and other bills.
- Loans can be offered with long-term repayments in order to keep payments affordable—up to a maximum of 30 years. Terms are determined on a case-by-case basis.
- Businesses will apply for loans online and select “Economic Injury” as the reason for seeking assistance.
- SBA offers disaster assistance via its customer service center. If you have questions or want to check if your state is eligible, contact U.S. Small Business Administration via phone at 800-659-2955 (TTY: 800-877-8339) or e-mail firstname.lastname@example.org.
Family and Medical Leave Act (FMLA) expanded to provide relief to those affected by COVID-19
March 20, 2020
“The Families First Coronavirus Response Act” (FFCRA), which goes into effect April 2, 2020 and expires December 31, 2020, responds to the coronavirus outbreak by providing additional assistance in the areas of COVID-19 testing, sick leave, food assistance and more. We’ve compiled key details of FFCRA that we believe you need to know.
In summary, the Act:
- Requires private insurance plans to provide free COVID-19 testing.
- Requires employers to provide emergency paid sick leave to workers affected by COVID-19 and expands family and medical leave.
- Offers increased funding for state unemployment insurance, food stamp and nutritional programs.
More specifically, here’s what FFCRA means for both business owners and employees in the areas of sick leave and expanded family and medical leave.
- Employees are eligible for up to two weeks of sick leave (full pay for self, 2/3 pay for family care) for illness, quarantine or school closures.
- Employees are eligible for up to 12 weeks of FMLA leave for school closures (10 days unpaid and then up to 10 weeks at 2/3 pay).
- FMLA expansion covers:
- Employers with fewer than 500 employees.
- Employees who have been employed for at least 30 calendar days (some exclusions may apply).
- Employees who must care for children under the age of 18 in the event of school and place-of-care closures or if care provider is unavailable due to a public health emergency with respect to COVID-19.
- Emergency paid sick leave covers:
- Employers with fewer than 500 employees.
- All employees no matter the length of employment (some exclusions may apply).
- Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.
Department of Labor Links:
- FFCRA: Questions and Answers
- As part of the FFCRA, employers are required to provide notice to employees of the Act’s provisions. An example of the required notice has been made available by the Department of Labor and can be downloaded here: FFCRA NOTICE TO EMPLOYEES.
- In addition, the Department of Labor has made available a FAQ page discussing the notice requirements: FFCRA NOTICE – FAQ.
WA State Updates
We have gathered additional resources for WA state and local relief efforts, as well as useful links to help our clients navigate through these challenging times.
Apply for up to $10,000 in emergency funding. Governor Inslee is offering a new Working Washington Small Business Emergency Grant program to assist small businesses impacted by the COVID-19 outbreak. The grant program will provide a limited number of businesses in Washington’s 39 counties with a grant up to $10,000.
DOR will work with you if you cannot file or pay taxes on time due to the COVID-19 outbreak.
A comprehensive resource for businesses. Check out the Employment Security Department COVID-19 webpage.
Employment Security has programs designed to help individuals and employers. This easy-to-read comparison guide lists some of the most common scenarios that may occur and benefits that may apply.
Information on the initial recovery package for small business owners to ease the financial impacts of the COVID-19 outbreak.
In addition to the CDC guidelines, this article by ADP addresses some common employer questions.