Coronavirus Response Pay Attention to Rapidly Changing Tax Rules
Federal, state, and local governments have responded to the COVID-19 coronavirus with a host of new programs and changes to tax rules and deadlines. Here are just a few you should be aware of.
• Delayed Deadlines. The IRS has deferred the deadline for filing and paying 2019 income taxes until July 15, 2020, and taxpayers can request extensions to October 15. First- and second-quarter estimated tax payments are also delayed until July 15. Businesses and self-employed individuals also may be able to postpone some of their 2020 Social Security tax deposits until 2021 and 2022. Many state tax deadlines have also changed, so check with your CPA to be sure.
• Sick Pay and Paid Leave Requirements. The Families First Coronavirus Response Act expanded mandatory sick pay and paid family leave benefits for companies with 500 or fewer employees. It also provided for refundable tax credits designed to offset some of these expenses.
• Payroll Credits and Loans. Several new programs are designed to encourage companies to keep people on the payroll. One of these is a refundable and advanceable payroll tax credit of up to $5,000 per employee. Another, the Paycheck Protection Program, offered forgivable SBA loans for companies that maintain their payrolls at required levels. Compliance milestones for both programs are fast approaching.
• Other Tax Changes. The Coronavirus Aid, Relief, and Economic Security Act restored net operating loss carrybacks, increased limits on the deductibility of business interest, accelerated refunds of corporate AMT credits, eliminated the 2020 required minimum distributions for IRAs and other qualified plans, and changed the rules on charitable contribution deductions.
Remember, this is only a partial listing—it is by no means complete. Moreover, tax rules will continue to change in coming months, so stay in close contact with your CPA for updated information.