Due to the far-reaching impact of COVID-19 and the resulting delay in the Federal tax filing/payment deadline, over the next several weeks our staff will be prioritizing those clients impacted by state filing deadlines that have not been extended. Additionally, many of our clients have reached out to us for guidance regarding the Federal CARES Act due to the severe impact COVID-19 has had on their businesses; as local business owners ourselves, we sincerely appreciate your understanding as we also make assisting these business owners a priority.
If you are an individual, fiduciary, or business client filing only a Federal return, please be assured that we continue to work on your returns; however, it may become necessary to extend and finalize your return(s) after the traditional April 15th deadline. The deadline for any taxes owed, including first quarter 2020 estimated tax payments, has also been moved to July 15th. We appreciate your patience and understanding during this unprecedented time.
Please know that we are as committed as ever to delivering the level of service you expect from us as we navigate these challenging circumstances together. For those with CARES Act questions, we have included some additional information below, and on our website at www.hkpseattle.com. Some aspects of this program continue to evolve, and we continue to monitor these updates closely.
Thank you for trusting us with your tax and accounting needs. Should you have questions, we can be reached at (206) 682-9200.
Jim Ramborger, CPA
Hagen, Kurth, Perman & Co., P.S.
CARES Act Highlights
Pease note, this information is not intended to be a comprehensive overview or viewed as accounting or legal advice. Should you have questions regarding the information below, please reach out to your HKP professional.
There are many challenges brought on by COVID-19 and the restrictions put into place to respond to them. We wanted to make your aware of some of the opportunities and incentives enacted to help deal with these challenges.
- Extension of the Federal return filing and payment date; for most returns and payments due on April 15th, the deadline has been pushed to July 15th
- Recovery Rebates (e.g. stimulus checks) of up to $1,200 ($2,400 for joint filers), plus $500 for each qualifying child will be issued to those who qualify based on your 2018 Federal Income Tax return (or 2019 return if you have already filed)
- Expansion of Paid sick and Family and Medical Leave
- Extension of HSA and IRA contribution dates; the due date to make contributions for 2019 IRA and workplace -based retirement plan was moved to July 15th, 2020; HSA contributions can be made anytime up to July 15th, 2020
- Waiver of the 10% penalty on Coronavirus related eligible retirement plan withdrawals of up to $100,000 for 2020
- Waiver of the 2020 required minimum distribution from IRA and other qualified plans
- Enhanced charitable contribution deductions; for 2020, the cash contributions made to charities can be deducted without limit
- Extension of the Federal return filing and payment date; for returns and payments due on April 15th, the deadline has been pushed to July 15th
- Employee Retention Credit: eligible employers can receive a refundable payroll tax credit on a quarterly basis for up to 50% of the qualified wages up to $10,000 paid to an employee (resulting in a maximum credit of $5,000 per qualifying employee)
- Delay of employer payroll taxes; the employer portion of the payroll tax payment can be delayed through the end of 2020; one half of the delayed payroll tax is due by December 31st. 2021 and the rest is due by December 31st, 2022
- Net operating losses from 2018, 2019 or 2020 are now eligible for a five-year carryback and the 80% limitation has been removed
- Adjustments to the business interest limitation rules; for both 2019 and 2020 the allowed business interest expenses deduction limitation is increased. Business interest income can be deducted up to the sum of the (1) business interest income (2) 50% of adjusted taxable income (increased from 30) and (3) floorplan financing interest expense
- Removal of the excess business loss limitations for 2018, 2019 and 2020
- Enhanced charitable contribution deductions; the limitation to corporate charitable contributions deduction is increased to 25% from 10% of taxable income
- Bonus deprecation and 15-year write-off on qualified improvement property, including retroactive adoption
In addition to the tax provisions above, the Small Business Association (SBA) has two programs to provide financing to businesses with under 500 employees who have been impacted by COVID-19:
- Economic Injury Disasters Loan (EDIL) Under SBA
Section 7(b) Program:
- Up to $2 million in loans
- Up to a 30-year term with a 3.75% interest rate
- Advance emergency grants up to $10,000 are available
- CARES Act Payment Protection Act under SBA
Section 7(a) Program:
- Loans can be up to the lessor of $10 million or 2.5 times the average monthly payroll costs
- Up to a 10-year term with 4% interest rate
- Expanded definition of small business to include sole proprietorship, independent contractors, and self-employed individuals
- Funds to be used for payroll, rent, utilities, and mortgage payments
- No personal guaranty or collateral are required
- Loan can be forgiven in whole or partially depending on the FTE retention by the business