As promised last week, I’m writing to share helpful financial updates affecting small businesses in relation to this pandemic. I expect more to come, but this is what has evolved since I last checked-in:
>> 2019 Federal Tax Returns due date (+payment) extended!
Your tax return filing deadline has now been officially extended to July 15, 2020 (90 days later than it was originally due).
Additionally, ALL 2019 tax payments are now due July 15, 2020, too.
*These rules only apply to your federal tax return. Your state’s 2019 tax return deadlines may or may not have been extended. I expect that most states will eventually extend their 2019 tax filing rules–but you will need to check in with your own state for that specificity. This list might help.
>> 2020 Quarterly Tax Payment due date extended!
If you’re required to make estimated tax payments, your first 2020 federal estimated tax payment is not due until July 15th, 2020.*
*There is talk this may be further delayed–will update as this solidifies.
>> 2 Possibly Helpful Tax Credit Requirements (especially if you have employees &/or if you’re self-employed)
The U.S. government has recognized most businesses will take a financial hit in this pandemic. One of the ways they’re buffering the financial blow for you (while helping you provide for your employees) is through these 2 tax credits:
1. Tax credits of up to 2 weeks (80 hours) of paid sick leave for employees.*
2. Tax credits of up to 10 weeks of emergency paid family and medical leave (basically employees caring for sick family or children who are out of school).**
How does this work? Per the IRS:
– Example 1, If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
– Example 2, If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
*It is mandatory that your business provides this to your employees if you have between 51 and 499 employees.
**There are some financial caps that come into play here. Please read the guidelines for more info, and if you need assistance figuring out what this means for you/how to implement it, schedule a call.
***Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on your income tax return and will reduce estimated tax payments.
>> Small Businesses with under 50 employees are ELIGIBLE FOR EXEMPTION on providing paid sick leave + child care.
If your business employs less than 49 people, you’re eligible for exemption from the 2 above tax credit requirements in cases where the “viability of the business” is threatened.
>> Note from Erin
I very much hope you’re well both in health & spirit during this unprecedented time. My hope and intent is that this post brings some clarity to your world right now. All of us are pivoting and re-calculating our present steps. Many of us are making difficult financial choices. If you’re unsure how to move financially forward, need help with realistic financial projections, or are ready to position your business for financial growth, it would be my honor to help.
Did you catch the post with thoughts & financial suggestions for how your business can get through the pandemic? Or the latest about PPP & EIDL loan options?