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Indiva Advisors LLP and COVID 19

Clients, Colleagues, and Friends, in response to the COVID-19 pandemic, the President and Congress have issued several emergency pieces of legislation over the past year that impact you, your employees, and your business.

Coronavirus Tax Relief and Economic Impact Payments

We’ve received many, many questions. Indiva Advisors LLP is taking this opportunity to provide brief summaries of the guidance and legislation issued with key takeaways where appropriate.

We are focused on finding ways to better serve you and keep you informed.

Whether you want to consult with us on new services or have questions about your existing services, Indiva Advisors LLP is here for you via phone, text, email, and virtual conferencing.

Learn how Indiva Advisors can help you with the cannabis accounting ramifications of the COVID 19 pandemic.

Notice 2020-18

Extends the tax return filing and payment deadline. (IR-2020-58)(IR-2020-57)

Information

  • The IRS extended the April 15, 2020, federal income tax filing and payment deadline to July 15, 2020.
  • First-quarter estimated tax payments that were due April 15, 2020, are now extended to July 15, 2020.
  • This deferment applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers as well as those who pay self-employment tax.
  • Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.
  • States are also providing tax relief for individuals and businesses.

Key Takeaways

For individuals – file your 2019 individual tax returns if you haven’t already. Filing electronically with direct deposit is the quickest way to get refunds. Also, this direct deposit information will be used to deposit the CARES rebate.

For businesses – use the additional cash that would otherwise be due April 15 (2019 final payment and Q1 2020 ES tax payment) for your primary business expenses It’s interest-free cash for 3 months, use it wisely. Remember it’s due July 15, 2020.

Another key date: June 15, 2020 – the Q2 2020 ES payment due date – yes, it’s due before the Q1 payment!

Families First Coronavirus Relief Act

Issued leave benefits to families impacted by the pandemic funded by employer tax credits. (IR-2020-57).

Information

  • For COVID-19 related reasons, employees can receive up to 80 hours of paid sick leave either for the employee’s own health needs or to care for family members.  Coverage includes expanded paid childcare leave when employees’ children’s schools are closed, or childcare providers are unavailable.
  • Employers, including those self-employed, have available refundable tax credits to offset the costs for providing coronavirus-related leave benefits (includes health insurance costs), which means employers receive 100% reimbursement for paid leave pursuant to the Act.
  • Small Business Protection clause – employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or childcare is unavailable in cases where the viability of the business is threatened.

Examples

  • If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
  • Equivalent childcare leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Key Takeaways

  • To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes.
  • If those amounts are insufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form (should be available week of March 30, 2020).

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

The massive stimulus package designed to support the American people and the economy.

Impact to Individuals

  • The bill would provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child.
  • The rebates would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset.
  • Other benefits to individuals include:
  • Waives the 10% early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps.
  • Employers may contribute up to $5,250 annually toward student loans, and the payments would be excluded from an employee’s income.
  • Expanded unemployment insurance (UI) for workers, including a $600 per week increase in benefits for up to four months and federal funding of UI benefits provided to those not usually eligible for UI, such as the self-employed, independent contractors, and those with limited work history.

Impact to Businesses

  • The bill provides $350 billion allocated for the Paycheck Protection Program, which is meant to help small businesses with fewer than 500 employees.
  • Small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year.
  • Loans may be forgiven if the company uses the loan for payroll, interest payments on mortgages, rent, and utilities.
  • Other business tax provisions include:
  • Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. It would be available to employers whose businesses were disrupted due to virus-related shutdowns and experiencing a decrease in gross receipts of 50 percent or more when compared to the same quarter last year.
  • The 50 percent refundable payroll tax credit is available for employees retained but not currently working due to the crisis for companies with more than 100 employees, and for all employee wages for companies with 100 or fewer employees.
  • Employer Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021, and the other half owed on December 31, 2022.

Contact Indiva Advisors LLP Today: 833.880.0420

Indiva Advisors LLP and COVID 19

Clients, Colleagues, and Friends,
in response to the COVID-19 pandemic, the President and Congress have issued several emergency pieces of legislation over the past year that impact you, your employees, and your business.

We’ve received many, many questions over the last few days. Indiva Advisors LLP is taking this opportunity to provide brief summaries of the guidance and legislation issued with key takeaways where appropriate.

We are focused on finding ways to better serve you and keep you informed.

Whether you want to consult with us on new services or have questions about your existing services, Indiva Advisors LLP is here for you via phone, text, email, and virtual conferencing.

Learn how Indiva Advisors can help you with the cannabis accounting ramifications of the COVID 19 pandemic.

Notice 2020-18

Extends the tax return filing and payment deadline. (IR-2020-58)(IR-2020-57)

Information

  • The IRS extended the April 15, 2020, federal income tax filing and payment deadline to July 15, 2020.
  • First-quarter estimated tax payments that were due April 15, 2020, are now extended to July 15, 2020.
  • This deferment applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers as well as those who pay self-employment tax.
  • Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.
  • States are also providing tax relief for individuals and businesses.

Key Takeaways

For individuals – file your 2019 individual tax returns if you haven’t already. Filing electronically with direct deposit is the quickest way to get refunds. Also, this direct deposit information will be used to deposit the CARES rebate.

For businesses – use the additional cash that would otherwise be due April 15 (2019 final payment and Q1 2020 ES tax payment) for your primary business expenses It’s interest-free cash for 3 months, use it wisely. Remember it’s due July 15, 2020.

Another key date: June 15, 2020 – the Q2 2020 ES payment due date – yes, it’s due before the Q1 payment!

Families First Coronavirus Relief Act

Issued leave benefits to families impacted by the pandemic funded by employer tax credits. (IR-2020-57)

.

Information

  • For COVID-19 related reasons, employees can receive up to 80 hours of paid sick leave either for the employee’s own health needs or to care for family members.  Coverage includes expanded paid childcare leave when employees’ children’s schools are closed, or childcare providers are unavailable.
  • Employers, including those self-employed, have available refundable tax credits to offset the costs for providing coronavirus-related leave benefits (includes health insurance costs), which means employers receive 100% reimbursement for paid leave pursuant to the Act.
  • Small Business Protection clause – employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or childcare is unavailable in cases where the viability of the business is threatened.

.

Examples

  • If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
  • Equivalent childcare leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Key Takeaways

  • To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes.
  • If those amounts are insufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form (should be available week of March 30, 2020).

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

The massive stimulus package designed to support the American people and the economy.

Impact to Individuals

  • The bill would provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child.
  • The rebates would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset.
  • Other benefits to individuals include:
  • Waives the 10% early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps.
  • Employers may contribute up to $5,250 annually toward student loans, and the payments would be excluded from an employee’s income.
  • Expanded unemployment insurance (UI) for workers, including a $600 per week increase in benefits for up to four months and federal funding of UI benefits provided to those not usually eligible for UI, such as the self-employed, independent contractors, and those with limited work history.

Impact to Businesses

  • The bill provides $350 billion allocated for the Paycheck Protection Program, which is meant to help small businesses with fewer than 500 employees.
  • Small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year.
  • Loans may be forgiven if the company uses the loan for payroll, interest payments on mortgages, rent, and utilities.
  • Other business tax provisions include:
  • Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. It would be available to employers whose businesses were disrupted due to virus-related shutdowns and experiencing a decrease in gross receipts of 50 percent or more when compared to the same quarter last year.
  • The 50 percent refundable payroll tax credit is available for employees retained but not currently working due to the crisis for companies with more than 100 employees, and for all employee wages for companies with 100 or fewer employees.
  • Employer Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021, and the other half owed on December 31, 2022.
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