On March 18, 2020, President Trump signed into law a second coronavirus emergency aid package intended to provide economic relief in response to the COVID-19 pandemic.
The latest package, entitled the Families First Coronavirus Response Act, responds to the growing health and economic crises with provisions for paid sick leave, family leave, COVID-19 testing and expanded unemployment benefits.
The Act provides for free COVID-19 testing, access to meals for school-aged children forced to stay home, extended unemployment insurances and other measures. It also provides paid sick leave for some workers and offers additional funding for seniors and food assistance,
The law also provides a tax credit to employers and self-employed individuals to help cover lost income due to the COVID-19 outbreak.
IRS Extends Federal Tax Filing Deadline to July 15, 2020
On March 20, 2020 Treasury Secretary Steve Mnuchin extended the federal tax filing deadline from April 15th to July 15, 2020. This supersedes the Act that did not affect tax season filing deadlines. Tax payment deadlines had already been extended. There is no need to file a request for an extension to file for either federal or California.
However, we advise you to please provide RINA with your tax information as soon as possible. Preparing the tax return as soon as you are able will allow us to give you plenty of notice about any amount due July 15th... or to file ASAP if you're due a refund.
Tax Credits to Employers and Self-Employed Individuals
Employers and Self-Employed Individuals can receive a refundable tax credit of up to 100% of qualified Paid Sick & Paid Family & Medical Leave for each calendar quarter through the end of 2020. Qualified Tax credits are allowed against the employer’s portion of Social Security taxes paid and is claimed on the employer’s quarterly employment tax returns. To assist with cash flow, employers can fund certain employee benefits by accessing employment taxes that have been withheld and set aside for deposit with the IRS. The tax credits below are subject to limitations.
- For Employers, the amount of credit per employee is capped at $511 per day for employees who receive paid sick leave because they are subject to a quarantine or isolation order, have been advised by a health care provider to self-quarantine, or are experiencing COVID-19 symptoms and seeking medical diagnosis. For Self-Employed Individuals the qualified sick leave equivalent amount is capped at the lessor of $511 a day or the average daily self-employment income for the tax year.
- The amount of the credit is capped at $200 per day for employees caring for a family member or a child whose school or place of care has been closed. Also, there are limitations on the total number of days considered per employee and a slightly reduced credit for those who are self-employed.
- For small employers, defined as those with fewer than 50 employees, family leave pay is exempt from certain employment taxes otherwise imposed on the employer. The employer’s deduction for the cost of the family leave pay is reduced by the amount of the credit.
- For Self-employed individual special rules apply. For example, self-employed persons may only take into account those days they are unable to work for qualified reasons under the Emergency Paid Sick Leave Law and they must maintain certain documentation which is yet to be prescribed by the Treasury to establish their eligibility for certain credits.
RINA Accountants & Advisors is here to get you through these difficult times and to keep you updated on the financial effects of this crisis.
Please, reach out to us if we can help in anyway. We are here to be of service.