To support small businesses and workers during these challenging times, IRS has announced tax credits for small and mid-size business to recover cost of paid sick leave and child care leave costs. Below are the details of tax credits available to small businesses and individuals.
Tax now Due on July 15th
Last week, the IRS deferred tax payments for certain individuals and businesses. The IRS has now extended the tax filing deadline from April 15th to July 15th. The IRS also deferred federal income tax payments due on April 15, 2020 to July 15, 2020 without penalties and interest, regardless of the amount owed.
This is an automatic federal filing and payment relief. Taxpayers don't need to file any forms to qualify for this relief.
Paid leave for employees
An employee who is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis is eligible to receive paid leave at 100% of employee's pay for up to two weeks (80 hours).
An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed, or is experiencing substantially similar conditions is eligible to receive paid leave at 2/3 of employee's pay for up to two weeks (80 hours). An employee may in some instances receive up to an additional ten weeks of expanded paid family and medical leave at 2/3 the employee's pay.
Tax credits for employers
Employers who pay their employees sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. If the payroll taxes aren't enough to cover the cost of qualified sick or child care leave paid, employers will be able to request payments from the IRS.
All the details on how to get the tax credit are not available yet. IRS will provide details this week and we will update you when more information is available.
Complete guidance from the IRS can be found here.
We are here to help
We continue to research this newly signed bill and will provide more information to our clients as it becomes available.
If you need assistance with preparation of your tax return, we can assist you remotely. We have an online tax preparation process in place where you can upload documents to our secure portal and we can prepare and e-file your taxes. We are also available to answer your questions via email or phone.