Adams Brown Tax Alert: COVID-19 Tax Relief for U.S. Taxpayers
The situation surrounding COVID-19, or the novel coronavirus, in the United States seems to change hourly. While we cannot expect to stay updated on every instance of the public health crisis, we do feel it’s important to monitor the tax and financial implications closely and update you accordingly.
In an effort to stem the financial bleed from Wall Street and give affected taxpayers more time to react, Congress put forth several relief efforts in the Families First Coronavirus Response Act. The legislation was signed into law late on March 18, 2020.
The Response Act contains the following provisions:
Protected Sick Leave
If you work for the government or if your employer has less than 500 workers, and you’ve been on the job for at least 30 days, you’re eligible for protected, and limited paid, sick leave days related to COVID-19. This includes coverage for you, or to care for someone (like your kids) who becomes ill or is deemed at-risk and must self-quarantine. Longer, unpaid leaves are protected as an extension of FMLA. There are some caveats:
- The benefits are limited to 10 days of paid leave.
- The paid leave does not apply to employers with more than 500 employees. Some large employers, like Wal-Mart and Target, have announced their own policies to ensure workers are paid.
- Employers with less than 50 employees have the option of filing for a hardship exemption if they feel they cannot guarantee the paid sick leave.
Therefore, even though there are some paid job protections available, it’s best to check with your employer, as they may have different guidelines.
Expanded Unemployment Benefits
Up to $1 billion in expanded unemployment benefits is expected to be made available to states. Click here to visit Kansas’s unemployment benefits site.
Tax Credits – Individual
Part of the legislation intends to treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections and tax credits.
Tax Credits – Business
Businesses that do give their workers paid sick or family leave related to COVID-19 will be eligible for tax credits. They can claim up to 100 percent of paid leave wages for each quarter and is to be taken against the employer portion of Social Security taxes. The 100 percent tax credit applies to workers directly affected, and a lesser credit can be taken for paid leave to care for a family member or child. There are exclusions; we will update you as we know more.
Self-employed individuals are covered here, too, and with similarly expected limitations.
Among the tax relief measures, other areas of the legislation included:
- Temporary suspension of interest on federal student loans
- Temporary suspension of work requirements for SNAP (Supplemental Nutrition Assistance Program, formerly food stamps)
- Buy-up of oil to shore up the country’s oil reserves
On March 20, 2020, Treasury Secretary Steven Mnuchin moved the April 15 deadline for filing tax returns and making payments to July 15, 2020.
To track the filing deadline in your state, click here.
Two related bills, Paid Sick Days for Public Health Emergencies and Personal and Family Care Act and COVID-19 Health Care Worker Protection Act of 2020, have been introduced in the House but not yet passed.
The White House is also discussing additional relief measures to aid individual taxpayers and affected businesses. They want to authorize individual cash payments to taxpayers, give $50 billion to the airline industry, and additional small business loans, among other initiatives. It’s unclear what the outcome will be, as the package needs introduced to lawmakers, who have their own priorities to discuss. A call to temporarily cancel payroll taxes for businesses is up in the air and does not seem to have bipartisan support at this time.
One of the benefits of a state or county declaring an emergency or disaster is that it opens up access to federal disaster relief. Disaster relief is available for and small businesses and nonprofits that need low-interest federal disaster loans to keep the lights on. Loans can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the impact of COVID-19. The interest rate is 3.75 percent for small businesses and 2.75 percent for nonprofits, and loans are available up to $2 million.
In Kansas, workers affected by COVID-19 can refer to the Kansas Department of Labor’s website for information on unemployment benefits, paid leave, and more. The one-week requirement to wait until benefits are kicked in has been waived. Click here to be redirected.
Anyone who is concerned about their tax or financial situation as a result of COVID-19 should reach out to their Adams Brown representative. We may be working remotely but rest assured, our responsiveness and attention to your needs is unchanged. You can use our general contact form here, or email/call your Adams Brown point person directly.
We’re here for you, your families, and your businesses during this uncertain time. Together, we can make the best of a difficult situation. We will continue to update you as more definitive guidance is passed. Check our website, social media channels, and your e-mail inbox for important announcements.