Adams Brown Tax Alert: COVID-19 Tax Relief for U.S. Taxpayers

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.

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.

Part of the legislation intends to treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections and tax credits.

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

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.