No one wants to fire or lay off employees during this pandemic. There is no precedent for determining the best way to help businesses and employees during these times. When the CARES Act passed into law, it included some provisions for small businesses.
In this article, we will delve deeper into some of those provisions. If, after reading this article, you have additional questions about assistance for small businesses, we invite you to contact The Law Office of Mary King, P.L. We are tax service law firm for individuals in Florida, and we are ready to provide you with quality legal advice on any individual tax issue. Call today at 941-906-7585, or fill out our contact form. We are here to help you.
The Employee Retention Credit
The CARES Act provided for something called the Employee Retention Credit. This was meant to help businesses keep employees on the payroll instead of letting them go or laying them off.
This credit can be used by any size business that has employees, including tax-exempt organizations whose business is suspended whether partially or completely by order of the government; or by businesses whose gross receipts are 50% less than what they were the same time last year. If a business qualifies for this credit, then they are eligible for a refundable tax credit of 50% of up to $10,0000 in wages paid during this time. The credit is for wages paid to employees after March 12, 2020, and before January 1, 2021.
It cannot be used by small businesses that use small business loans under the Paycheck Protection Program or by government entities.
Paid Sick Leave and Family Leave Tax Credit
Another item in the CARES Act that aims to help businesses is the paid sick leave and family leave tax credit. This credit is available from April 1, 2020, through December 31, 2020. This credit works by allowing employers to reduce the payroll taxes that are normally paid to the IRS.
The tax credit kicks in when a business has employees who can’t work (including telework) because:
1. They are quarantined due to the Coronavirus;
2. They are self-quarantined due to the Coronavirus;
3. They are showing symptoms of the virus and are trying to get tested to determine if they have it;
4. They are providing caretaker services to a family member who has the virus; or
5. Their child is home because schools are closed or daycare is closed or the childcare provider can’t provide care due to the virus.
Any employee that falls under the paid sick leave guidelines 1-3 above receives 80 hours or 10 paid sick days to leave up to $511 per day. While the employees that fall under 4-5, get 80 hours or 2 weeks paid sick leave at the rate of 2/3 their regular pay or $200 per day capped at $2,000. In addition, employees can get family and medical leave for 10 weeks at 2/3 their normal pay capped at $10,000.
Businesses can claim the tax credit for all of this. Normally, the payroll taxes for these checks would be deposited with the IRS but, to claim the credit, employers do not need to deposit the payroll taxes taken out of these qualifying employee’s paychecks. This also includes related health plan expenses and the business’s share of Medicare taxes on the leave pay. Self-employed people can claim this tax credit as well when they take paid sick leave.
There are many caveats and specific rules and ways to claim these credits. It can be confusing, and different businesses may have issues and questions that arise and do not want to end up owing the IRS money in the end. That is why it would be beneficial to get the information upfront and speak to a Florida tax service law firm for business to make sure all credits are claimed and claimed correctly.
Families First Coronavirus Response Act
The employee retention credit and the paid sick leave and family leave tax credit are something different than the Families First Coronavirus Response Act (FFCRA). Any wages used to claim a credit under FFCRA cannot be used for the tax credits discussed above. They are separate tax credits and cannot overlap.
The FFCRA credit is for businesses with fewer than 500 employees and covers 100% of 10 days of sick leave and of 10 weeks of family leave wages. In addition, it provides credit for qualified health plan expenses and the employer’s Medicare taxes on those wages. It is effective to leave that an employee takes between April 1, 2020, and December 31, 2020.
Businesses are responsible for posting an Employee Rights Poster informing employees of their right to leave time and payments. The tax credits businesses are entitled to vary depending on if it is sick leave or family medical leave as well as for the reason for the leave. An employee can take emergency paid sick leave, and the reason for the leave makes the employer responsible for paying either 100% or 2/3 of the employee’s regular pay. With the tax credits for the business capped at $511 per day with $5,111 total or $200 per day with $2,000 total tax credits. If the employee needs emergency FMLA leave, then the tax credit is capped at $200 a day with a maximum of $10,000 allowed to be used for the tax credit.
The differences can be hard to decipher for business and the reasons for paying or not paying, as well as how much credit a business can take can best be explained by a Florida tax service law firm for business.
Extended Tax Filing and Payment Deadlines
Businesses (as well as individuals) now have until July 15, 2020, to file their tax returns. No penalty is assessed for payments owed or for waiting until that deadline to file and make payments. This also includes any estimated tax payments for 2020 that were due by April 15, 2020. In addition, if a business wishes to request an extension past July 15, 2020, to pay taxes owed to the IRS they can file Form 7004.
The state of Florida instituted a multitude of changes to different filing deadlines for businesses that can be confusing and it may be hard to decipher which payment or filing is due by what date. It is best to consult a Florida tax service law firm for businesses to understand your filing requirements and deadlines.
Get the Assistance of Experienced Tax Attorneys in Florida – Call Mary E. King, Esq.
If you have questions about COVID-19 legislation, are struggling with back taxes, or if you are a business that needs to plan tax payments throughout the year, then you need the help of an attorney who has experience with tax planning attorney in Florida.
The Law Office of Mary King P.L. can help you with all of your tax needs. We have experienced tax attorneys in Florida, and we offer complete services in all areas from tax implications of alimony to planning the most efficient tax strategy for individuals and businesses. We are proud of the experience and resources we have to provide to our clients.
Call our tax attorneys in Florida today to schedule an initial consultation. With years of experience, the Law Office of Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585.