As you are aware, in our industry, we are in the heart of the busiest time of year. We sincerely hope that you, your families, and your team members are staying healthy. As we continue to monitor the situation with COVID-19 (coronavirus), we want to provide an update on our internal policies and remind you of the resources we have available to you to keep you and our team members safe and healthy.
Here at Tracey & Tracey, we have technology in place that allows our team members to work from virtually anywhere with an internet connection. We have instructed our team members to work from home if they feel sick. If anyone comes to our offices appearing to be sick, whether that be an employee or a guest, they will be asked to leave for the safety of our employees and visitors. No exceptions.
With schools closed throughout New Jersey, some members have young children and may need to work from home to care for them. We don’t expect this to interrupt client service, but we do seek your patience and understanding during these extraordinary times.
We will continue to do everything in our control to ensure that we are still available by phone or email. We are committed to serving you with as little disruption to our services as reasonably possible.
Virtual Meetings & Our Online Client Portal
If you have meetings scheduled, please make sure to touch base with Pat if you have not already heard from her. We encourage you to send your information electronically or via U.S. mail, and to hold in-person meetings by phone instead.
Additionally, if you feel sick or don’t feel comfortable coming to our office to drop off or pick up your tax documents, remember that we have a secure online client portal that you can access 24/7.
If you’re not already registered for the portal, you can reach out to get registered. Registered users can log in here.
Federal Tax Filing: On March 20th, the IRS formalized the extension of the tax filing deadline to July 15. This means that there is an automatic extension to July 15th, without the need to apply for one. This includes all persons (individuals, trusts, estates, partnerships, associations, companies, and corporations). There is no limitation on the amount of the payment that may be postponed. The relief in the newest IRS notice applies to both Federal income tax payments for 2019 and Federal Estimated Tax payments for he 2020 taxable year.
Other federal tax returns likely still due on April 15. The Notice explicitly states that no extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return. This suggests that the IRS’s view is that gift tax returns, for instance, are still due on April 15, unless an extension of time to file is filed with the IRS on or before that date.
New Jersey Filing: Under a bill passed by the New Jersey Legislature this week, the federal move triggers a deadline move for income tax and corporate tax filing to June 30, 2020. As we know more on this, we will update. We will also make sure to update any changes to deadlines for Sales Tax filings and Payroll filings.
Federal AID and Congress
Coronavirus Aid Bill: The Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748, which was signed by President Trump on March 27. 2020, contains a host of tax measures as part of a $2 trillion aid package designed to help the economy as it suffers from the effects of the coronavirus pandemic. While the focus of the legislation is not tax, a large number of tax provisions are included in the over-600-page bill.
Below are the highlights from the legislation:
- Recovery rebates:
- The bill provides for payments to taxpayers — “recovery rebates” — which are being
treated as advance refunds of a 2020 tax credit.
- Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child.
- The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000
for other individuals.
- The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts.
- Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive.
- The bill provides for payments to taxpayers — “recovery rebates” — which are being
- Retirement plans
- Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the Sec. 72(t) 10% additional tax for early distributions.
- Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years.
- For these purposes, an eligible taxpayer is:
- one who has been diagnosed with SARS-CoV-2 virus or COVID-19 disease
- whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease
- who experiences adverse financial consequences from being quarantined, furloughed, or laid off, or who has had
his or her work hours reduced, or who is unable to work due to lack of child care.Any resulting income
inclusion can be taken over three years.
- The bill also allows loans of up to $100,000 from qualified plans, and repayment can be delayed.
- The bill temporarily suspends the required minimum distribution rules in Sec. 401 for 2020.
- The bill delays 2020 minimum required contributions for single-employer plans until 2021.
- Emergency Paid Sick Leave
- Provide 80 hours of sick leave for full-time employees. Part-time employees are entitled to leave equivalent to their normal schedule
- Applies when; employee’s child’s school/daycare is closed, caring for employee or family member quarantined, employee is experiencing symptoms
- Sick leave wages are exempt from employer’s portion of SS tax and an additional payroll tax credit for the amount of Medicare tax paid on wages
- Emergency Family and Medical Leave Expansion
- FMLA leave is expanded
- Eligible employees are those who have been on the job for at least 30 days
- The first 10 days of the expanded FMLA is unpaid
- Employee retention credit
- The bill creates an employee retention credit for employers that close due to the coronavirus pandemic.
- Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.
- Eligible employers are employers who were carrying on a trade or business during 2020 and for which the operation of that business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak. Employers that have gross receipts that are less than 50% of their
gross receipts for the same quarter in the prior year are also eligible, until their gross receipts exceed 80% of
their gross receipts for the same calendar quarter in the prior year.
- For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts.
- For employers with 100 or fewer employees, all wages paid qualify for the credit.
- Payroll Tax Credits
- The paid sick time credit can be claimed on a quarterly basis. The amount is equal to 100% of the sick leave wages paid. The credit is limited to $511 per day if an employee is taking time off to care for themselves or $200 per day if the sick leave is to care for an individual quarantined, showing symptoms or caring for a minor child whose school is closed.
- Both credits are refundable if they exceed the amount the employer owes in payroll tax
- The IRS is instructed to waive any penalties for failure to deposit payroll taxes under Sec. 3111(a) or 3221(a) if the failure was due to an anticipated payroll tax credit.
- Credits for Sick & Family Leave for Certain Self-Employed Individuals
- Self-employed workers will also be able to claim a credit on their tax return (not through payroll tax returns). Covers 100% of self employment income or 67% if the individual is taking care of a child whose school has closed.
- The per day amount is limited to the lesser of an individual’s average daily self-employment income, or $511 per day if caring for themselves or $200 if caring for a minor child.
- The eligible days are limited to 10 (Sick Leave) and 50 (Family leave)
Additional Resources For Small Businesses
- Centers For Disease Control And Prevention – Resources for Businesses and Employers
- U.S. Department of Labor – Workplace safety, unemployment insurance flexibility, wages and more.
- Small Business Guidance & Loan Resources – Guidance for Businesses and Employers
- NJ Department of Labor & Workforce Development – Coronavirus and unemployment insurance benefits
- NJ Department of Health – Updated confirmed cases, questions, how to prevent and prepare, and more.