Tax rules, new programs, new tax laws, and relief packages are coming out & changing so fast, we cannot keep up with them all. We are making an effort to keep you informed of the most urgent and common issues to affect our client group of small businesses and self-employed individuals.
Below are the basics on what’s changed for tax filings and the new Families First Coronavirus Response Act that applies to all employers.
B&O Tax Deadlines
The WA State Dept of Revenue (DOR) is offering extensions.
- If you are a monthly filer, you must call to request an extension – 360-705-6705
- If you are a quarterly filer, Quarter 1 is now due June 30, 2020 (no call required).
- If you are an annual filer, your 2019 return is now due June 15, 2020 (no call required).
The City of Bellingham is offering automatic extensions – Quarter 1 and Quarter 2 B&O tax filings and payments are now due October 31st.
Federal Income Tax Deadlines
All tax returns that were due on 4/15/2020 and all tax payments that were due on 4/15/2020 are now due on 7/15/2020. This means the following:
- You do not need to file an extension, just file by 7/15/2020.
- You can still file an extension in time to file to 10/15/2020 if you need more time. (This does not extend your time to pay your tax beyond 7/15/2020.)
- The IRS will not calculate penalties & interest until 7/15/2020.
- If you failed to make estimated tax payments for 2019, the underpayment penalty still applies.
- Your Quarter 1 estimated tax payment that was due 4/15/2020 is now due 7/15/2020.
- Your Quarter 2 estimated tax payment is still due 6/15/2020 (no extension)
- You now have until 7/15/2020 to make IRA and qualified pension contributions that were due by 4/15/2020. (This is NEW clarification from the IRS this week.)
- Payroll Taxes are still due on their normal due dates (even the March payroll 941 deposit normally scheduled for 4/15 – it is still due 4/15).
Attn Employers: “Families First Coronavirus Response Act” (CRV Act)
- ALL employers (regardless of the number of employees) are required to comply. (The Dept of Labor has said that a small business of fewer than 50 employees can elect to be exempt from this act, but they have not provided any information on how to do this.)
- You are required to post notice of this act and the associated benefits for your employees.
- This is a legal obligation for employers, if you have detailed questions about this new & complex law, please contact your attorney for clarification.
- I strongly encourage you to keep excellent records – you as the employer are responsible for following these new rules and can be penalized for doing it incorrectly.
- These employee benefits are effective for 4/1/2020 – 12/31/2020. It does not apply to dates before 4/1/2020.
- These benefits are not available to employees if the business has closed, including under Governor Inslee’s “Stay Home” order.
CRV Act – 2 weeks sick leave:
Employees who are sick or mandated quarantined (by a medical professional or the state – this does not apply if the employee self-quarantines), are eligible for 2 weeks of federal sick leave pay for 100% of normal wages (up to $511 per day).
CRV Act – 12 weeks family medical leave:
Employees who are ill, caring for someone who is ill, or caring for children who are at home because of school closure are eligible for up to 12 weeks of federal family medical leave. The first two weeks are unpaid, the remaining 10 weeks are paid at 2/3 of normal wages (up to $200 per day).
CRV Act – payroll mechanics
Employers are required to issue the payroll to employees under these two provisions. These wages are exempt from Social Security tax, but subject to all other payroll taxes.
Employers can then request a tax credit to offset the cost. The tax credit is equal to the employee’s Net Pay + federal withholding + Medicare tax (employee & employer portions) + cost of medical insurance tax free benefit provided to employee
The form for requesting this reimbursement has not yet been issued, but we are expecting to have it soon (likely early April). The tax credit will be taxable income to the employer.
CRV Act – self-employed individuals
These federal sick leave and family medical leave policies are extended to self-employed individuals through a tax credit. The amount involves a calculation of average daily earnings, then applying the same rules as above. We are waiting for more detailed guidance on this provision.
There is additional new legislation that has just been passed that includes stimulus payments to some taxpayers. This new law is over 800 pages long – we are digesting this information as quickly as we can and expect to send out a newsletter soon covering the basics and answer most of your questions.
We are also starting to see more details coming out on the SBA small business loan programs (that include loan forgiveness), the extended unemployment benefits available to unemployed workers (and self-employed & contract workers who normally do not have coverage), and the state small business grant programs.
If you are looking for immediate financial support for you or your small business, I encourage you to look into these programs in more detail.
I hope this information is useful as we navigate the rapid updates coming out.