By Ken Boyd
We are all having to adapt to new ways of living during the COVID-19 pandemic. But some people have been affected financially much more than others. Some employees have been furloughed, while others have been forced to become unemployed. However, if the coronavirus has negatively affected your work and wages, there are several tax breaks, tax credits and financial aid programs that could help you.
There are other taxes to pay besides federal taxes. Will you get any tax breaks or perks for state taxes and other taxes levied at small businesses and entrepreneurs? The answer is, it depends on your personal circumstances and which state you live in. The American Institute of Certified Public Accountants has put together a large document to include all relevant information for each state, and the document is updated regularly. It currently includes over 300 pages to wade through. But for an overview of the important information contained in the document, you can check out this helpful summary of coronavirus tax breaks for each state, which includes statements delayed, payments delayed, new deadlines, and unaffected taxes. Coronavirus Tax Credits
Sadly, COVID-19 has caused many workers to either be laid off or furloughed. To help workers more, the US government is implementing coronavirus tax credits to qualifying businesses and individuals who have been affected by the virus in relation to work.
There are some tax credit schemes that could help you. The first is the Department of Labor’s Families First Coronavirus Tax Relief. To qualify, workers must have up to 80 hours of paid sick leave and additional medical or family leave to workers for specified reasons related to the coronavirus pandemic.
Businesses cannot afford to pay employees wages while they are closed. So, the IRS is providing various tax credits for employers and self-employed people. That includes fully refundable tax credits for up to 80 hours of required sick pay at an employee’s usual pay rate and paid family leave of up to $200 per day over a period of up to 10 weeks. No more than $10,000 can be claimed. Furthermore, an employer’s share of Medicare taxes can be paid for any leave by employees between April 1 and December 31, 2020.
Another scheme is the Employee Retention Credit. This credit can be claimed by non-government businesses, including tax-exempt businesses, as long as they do not take out small business loans. Businesses can refund 50% of the wages paid to their workers, up to $10,000. Terms and conditions apply, though. The business must be fully or partially suspended due to the virus, by government order, and the gross receipts for the refundable period have to be under 50% of what they were during the same time of the previous year.
Even with the above tax breaks and tax credits, a large number of people will be out of work for an indeterminate amount of time due to the COVID-19 pandemic and lockdowns. Therefore, the US government has begun to implement various coronavirus aid programs for financially-struggling citizens. Some of the most notable ones include:
· The CARES Act, which can send direct payment to qualifying individuals.
· SBA Loans for COVID-19, which offers small businesses and self-employed people a range of loans and funding programs for maintaining payroll for employees, receiving immediate cash advances, and relieving debts already accrued. Loan programs include the Paycheck Protection Program, the Economic Injury Disaster Loan, and the Express Bridge Loan Pilot Program.
Ken Boyd is a finance and tax expert at ais-cpa.com/.