Coronavirus Aid, Relief, and Economic Security (CARES) Act
- SBA – here you will find information on all COVID-19 related programs that SBA is providing, including the Paycheck Protection Program, Economic Injury Disaster Loans and Emergency Grants, and Small Business Debt Relief.
- Department of Treasury – here you will find information on the Paycheck Protection Program, as well as other tax provisions meant to help employers, including non-profits.
Summary from my CPA
NEW TAX CHANGES FOR BUSINESSES IN THE CARES ACT
We have previously addressed the effects of the CARES Act upon individuals, SBA loans, the paid leave and deferred filing requirements. If you missed any of those newsletters, please let us know and we will forward those to you. Today we address changes made for your businesses.
- Payroll Tax Credit – If you have an average of 100 or fewer employees in 2019, you are eligible for a payroll tax credit. This is all employee wages even if they are furloughed. Employers with more than 100 employees can apply, but they can only get a credit for furloughed employees and ones who have reduced hours.
The definition of wages includes health care benefits and is capped at
$10,000 per employee.
The credit is 50% of wages paid by employers during the COVID-19
crisis. It is a refundable credit.
Wages do not include amounts for payroll credits taken under the prior
provisions for sick/family leave.
The credit is not available to employers who receive funds from Small
Business interruption loans. That is a separate program from the
Paycheck Protection Program.
Your payroll service will need to handle this and you need to work with
- Payroll Tax Payment Delay – Employers can defer (not abate)
payment of the employer’s portion of social security taxes (6.2%)
The deferral period is for payroll paid from the time of enactment of the
bill until December 31, 2020.
The deferred taxes are due 50% by December 31, 2021, and 50% by
December 31, 2022.
This feature of the bill cannot be used by anyone who has debt
forgiveness from the SBA loans. No double benefit. And no deferral of
paying the taxes withheld from employees or Medicare taxes.
NOTE: Some of these programs are confusing or overlapping (you can choose one or the other). We cannot spare you that; we can only hope to explain in plain English.
- Net Operating Loss – There is a temporary relaxation of benefiting
from Net Operating Loss (NOL). If you believe you have a NOL then we
can discuss whether these provisions make sense for you.
- Business Interest Deduction – The 2017 Tax Act limited deduction of
business interest to 30% of adjusted taxable income. This act raises
that limit to 50% for 2019 and 2020 only.
This rule may not apply to partnerships (Most LLCs are treated as
partnerships.) Please check with us if this affects you.
- Bonus Depreciation Back Again – There was special depreciation
available for certain kinds of property that was in the law through 2017.
It was left out of the 2017 Tax Act by mistake. The CARES Act restores
that depreciation permanently and is retroactive for 2018 and 2019
The types of property that can get a special 15-year depreciation period
(instead of 39 years) are qualified improvement properties. The old act
covered qualified leasehold improvements, qualified restaurant
improvements and qualified retail improvements. This acts simplifies
that and groups them all into one category.
You can get 100% depreciation on these improvements. THiS IS NOT
available for residential property.
As always contact me, if you have any questions. Thank you
Links & References
to our web pages
Medicare Eligible – Lay off from Employer Plan?