Families First Act

March 18, 2020

 

Mandatory Sick & Paid Family Leave

  • Employers with fewer than 500 employees

  • Period covered: April 1, 2020 to December 31, 2020 

  • 100% refundable tax credit for qualified wages paid to qualified employees

 

Employer Requirement:  Post this notice where employees can see it.

Notes:

  • Smaller companies (under 50) may qualify for an exemption of paid family leave requirement if doing so jeopardizes their company.

  • You are exempt if you have furloughed your employees on or after April 1, 2020.

 

There are three types of leave

 

1) Paid Sick Leave

  • Two weeks, up to 80 hours

  • 100% of regular pay, up to $511 per day (max $5,110)

  • For employees who are ill, quarantined or seeking care

 

2) Paid Family Leave + Paid Sick Leave

  • Two weeks, up to 80 hours

  • 2/3 regular pay, up to $200 per day (max $2,000)

  • For people caring for sick individuals

  • For people taking care of minor children whose school or child care closed

 

3) Paid Expanded Family Leave

  • Up to an additional 10 weeks

  • 2/3 regular pay, up to $200 per day (max $12,000)

  • For people taking care of minor children whose school or child care closed

 

Part-time employees

  • Eligible for leave for the number of hours they normally work

 

Tax Credit

  • Includes 100% reimbursement of wages paid

  • Includes credit for health insurance paid for that employee

  • No payroll tax liability on wages paid

  • Claim your credit by offsetting existing payroll taxes due for the quarter

  • If a refund is calculated, the IRS will expedite the funds

  • Employers receive the tax credit by reducing their payroll tax deposits

 

Self-employed

  • Your wage calculation would be your average daily self employment income 

  • The tax credit may be claimed on your 2020 income tax return

  • Tax Tip: you may decide to reduce your quarterly estimated tax payments

 

FAQ's on the Families First Act from the Department of Labor

 

More Info on the Families First Act

CARES Act

March 27, 2020

 

This act contains many different components including benefits for Business & Individuals.

CARES Act Guide


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RELIEF FOR BUSINESSES 

Note: Receiving a business interruption loan under the CARES Act disqualifies you from being able to take the Employee Retention Credit.

 

Employee Retention Payroll Tax Credit

  • Eligible period: for wages paid during March 12, 2020 to December 31, 2020

  • For employers who have either:

    • partially or fully shut down or 

    • significantly lost revenue due to COVID-19 (over 50% decline compared to the same quarter last year)

  • Refundable tax credit = 50% of wages (including health plan costs)

  • Up to $10,000 of qualified wages per employee

  • Max credit is $5,000 per employee

 

Advance on Credits

File IRS Form 7200 to request an advance on a payroll tax credit in order to have the funds to pay your employees.  Click here for the form and instructions.

 

Using Credits and Loans

  • You can take the Employee Retention Tax Credit and the Tax Credits for Paid Sick Leave under the Families First Act, but not for the same wages

  • You may NOT take the Employee Retention Tax Credit if you are also receiving a loan under the CARES Act, such as the Paycheck Protection Program (see below).

SBA Economic Injury Disaster Loans (EIDL)

For small business (under 500 employees), non profits, renters & homeowners

 

1) EIDL up to $2 Million

  • Payments may be deferred from 6 to 12 months

  • Terms are dependent upon the borrower's ability to repay

 

2) Emergency Grant up to $10,000

Available through December 31, 2020

  • This grant does not need to be repaid

  • Receiving this grant does not disqualify you from

    • deferring payroll tax (see below)

    •  

  • To provide immediate funds of up to $10,000

  • Quick application, quick funding (within 3 days)

  • Use funds for:

    • payroll costs

    • sick leave

    • rent and mortgage

    • expense obligations unable to pay due to revenue losses

    • increased costs of materials due to interrupted supply chains

 

3) Home Loans or Sole Proprietor Loans

  • Register with the Federal Emergency Management Agency (FEMA) to obtain a FEMA Registration ID Number by calling 1-800-621-3362 prior to applying for an SBA loan.

 

Apply with the SBA for an EIDL here

  • Check the box at the end to be considered for the Emergency Grant

Paycheck Protection Program

Available through June 30, 2020

  • Click here for more info on PPP

  • Contact your bank to apply

  • To provide capital to cover the cost of retaining employees

  • To help retain employees & bring laid off workers back on payroll

  • Fully or partially forgivable

  • Receiving this loan disqualifies you from being able to take the Employee Retention Credit

 

Use funds for:

  • Payroll compensation & costs

  • Health care benefits

  • Interest payments

  • Rent

  • Utilities

 

Loan terms

  • Amount borrowed is based on 2.5 times average monthly payroll costs

  • Up to $10 million

  • Maturity is 2 years

  • Up to 1% interest rate

  • Zero loan fees

  • 6-12 months deferral

 

Forgiveness & payment terms

  • Covers up to 8 weeks of payroll costs based on retention & salary levels

  • Amount forgiven is reduced if:

    • Employee count (full time equivalents) drops

    • Salaries and wages drop below 25%

  • Support documentation is required such as payroll reports, mortgage bills & utility bills

  • This one's complex and there is still guidance emerging. 

  • Click here for additional, detailed information.

Small Business Debt Relief Program


Payroll Tax Due Date Extensions

Available for payrolls from March 27, 2020 to December 31,2020

A business who has had loan forgiveness under the Paycheck Protection Program or an EIDL in the CARES can not also defer payroll tax.

  • Employer portion of Social Security & Medicare tax payments may be delayed:

    • 50% due on 12/31/21

    • 50% due on 12/31/22

 

Net Operating Loss Carrybacks (NOLs) are Back!

This is retroactive for earnings in 2018, 2019 or 2020.  You may consider amending those company tax returns if you could benefit from this.  If you had a loss in those years and wish to carry it back five years, you could receive a refund now.


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RELIEF FOR INDIVIDUALS

Federal Pandemic Unemployment Insurance Benefits 

Available from January 27, 2020 to December 31, 2020

  • Up to $600 per week

  • Available for:

    • self-employed

    • independent contractors

    • those who did not otherwise qualify for state unemployment benefits

  • Up to 39 weeks of unemployment benefits (extends state benefits by 13 weeks)

  • File a claim with your state unemployment agency

 

Cash Charitable Contributions Deduction

  • Up to $300 "above the line" deduction

  • For those who are taking the Standard Deduction


Waivers

For the calendar year 2020 for qualified individuals

  • The 10% early withdrawal penalty on retirement account distributions may be waived.

  • Return funds within 3 years = rollover & you can amend prior year returns to remove the distribution from income.

 

Required Minimum Distributions

RMS rules are waived for 2020.

 

Student Loan Suspension

Suspends federal student loan payments to September 30, 2020, interest free

 

Tax Tip: Consider a Roth IRA Conversion in 2020

 

More CARES Act Details

Economic Impact Payment

The government is sending us money!

How much?

$1,200 per taxpayer

$500 per child under 17

Nontaxable income

Who gets it?

On your most recently filed tax return (2018 or 2019), they'll base it on your adjusted gross income (AGI) of

  • Up to $75,000 for individuals and

  • $150,000 for married couples filing jointly.

  • The payment will be reduced by $5 for every $100 for AGIs above these amounts.

  • You may also receive $500 per qualifying child

 

When?

 

How?

  • Direct deposit using information they already have

  • Paper check if no direct deposit info is available

  • You will be able to provide your direct deposit information on the IRS website (when the site is ready)

 

What if?

I didn't file a tax return last year. 

  • No action is required if you are receiving social security benefits. 

I made too much! 

  • You may still have a tax benefit on your 2020 tax return if your income drops below the threshold in 2020.   

I made too much in 2020.

  • If your income increases in 2020 and you've already received the payment, you do not have to pay it back.

I owe the IRS money.

  • The IRS won't reduce your payment by back taxes.

 

Nope.

You will not receive a payment if:

  • Your income is above the threshold

  • You are a dependent on someone else's return, but not a child (such as your grandma whom you support & students over 16)

 

Beware of Scams!

 

The IRS will NEVER call you or email you to verify your information.  They do send snail mail to communicate.

 

The economic stimulus payment will arrive either by direct deposit or they'll send a check by mail.  No action is required, even if you do not normally have a requirement to file a tax return.

 

The IRS will not reach out to anyone by phone, email, mail or in person to request financial information.

 

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