Business Tax Implications Due To Coronavirus
Below are the relevant business tax implications due to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
If you have fewer than 500 employees or are self-employed, you are eligible to apply for a business loan of up to $10 million. Interest rates cannot exceed 4% and some of the loan amounts could be forgiven if used within 8 weeks for the following costs: payroll (including health care and money paid to independent contractors), mortgage or rent and utility payments.
If you reduce your headcount, the amount forgiven will be reduced but if you add headcount, the amount forgiven will be increased.
Employee Retention Credit For Employers
You could receive a refundable payroll tax credit for 50% of wages paid if your operations have been suspended or you have had more than a 50% reduction in quarterly receipts.
If you have fewer than 100 employees, you calculate the credit based on all your employees’ wages. If you had more than 100 employees, only the wages of those furloughed or faced with reduced hours are eligible for credit.
Wages do not include amounts taken into account for purposes of the payroll credits, for required paid sick leave or required paid family leave in the Families First Coronavirus Act.
Example: In the 2nd quarter of 2020, you receive 50% less in receipts than you did in the 2nd quarter of 2019. You have fewer than 100 employees and paid $50,000 in wages (which includes health benefits and is capped at the first $10,000 in wages paid to each employee) during the 2nd quarter of 2020. You may receive $25,000 in payroll tax credit. You only owe $4,000 in payroll taxes so you can receive $21,000 back.
Delay Of Employer Payroll Taxes
The 6.2% of Social security taxes that employers pay and the 12.4% of self-employment taxes paid by a self-employed individual which are due from March 27, 2020, to December 31, 2020, are delayed. These amounts can now be paid over 2 years. Half of the amount is due by December 31, 2021, and half by December 31, 2022.
CORONAVIRUS LEGAL HELP
Learn More About Business Tax Implications Due To Coronavirus
Contact The Sterling Firm for more information or legal assistance. Speak to one of our attorneys to learn more about the business tax implications due to coronavirus. Justin Sterling, Esq. is an experienced attorney who is dedicated to helping his community through this difficult time. Together we can overcome this pandemic. May God Bless.