> > For up-to-date information regarding tax law changes due to COVID-19, please like us on Facebook. <<
THE CORONAVIRUS STIMULUS PACKAGES AND WHAT THEY MEAN IS IN FLUX: check back for updates!
Congress has passed several different bills related to the coronavirus crisis.
At this point, I am studying the laws and dealing with the complex nuances of the law. Even my colleagues have a conflicting understanding of the law.
Please allow me 24 to 48 hours to digest the law, and I will put out my understanding as soon as I can provide you with the correct information.
Calling and emailing now just clogs up the process of interpreting this while also preparing returns. Please submit your questions via email or portal message, and I will answer them here.
> ctrl+F to find keywords on this page <
~*~ UPDATES ~*~ (FAQs below)
March 22, 2021
March 19, 2021
March 18, 2021
March 11, 2021
January 25, 2021
January 13, 2021
January 6, 2021
December 23, 2020
September 3, 2020
June 18, 2020
June 4, 2020
- The PAYCHECK PROTECTION FLEXIBILITY ACT just passed!
May 4, 2020
- A new IRS ruling turns the PPP loan forgiveness on its head:
PPP LOAN FORGIVENESS MAY COST YOU!
April 24, 2020
- UNEMPLOYMENT FAQs under new COVID-19 Legislation
April 21, 2020
- Unemployment Available for Non-Traditional Claims
- Also known as “Pandemic Unemployment Assistance”
- includes unemployment benefits for self-employed individuals
- Please check your state’s unemployment website for the most accurate and up-to-date information
April 15, 2020
- Stimulus Money For You (For Real)! – Also known as Economic Impact Payment
- People with banking info on file with the IRS are beginning to receive their stimulus money directly deposited to their account
- Otherwise, wait for your stimulus check to arrive by mail in the upcoming weeks (could take months)
- You can track your EIP here: https://www.irs.gov/coronavirus/get-my-payment
- FAQs about Stimulus Payments here: https://www.irs.gov/coronavirus/economic-impact-payment-information-center
April 11, 2020
- As of 4/9/20, the IRS has already begun depositing stimulus money for those who with bank info on file, so don’t be alarmed if you see a deposit from the IRS that doesn’t match your refund! We will post a link to track your stimulus payment once the IRS makes it available.
- The Latest Updates on the Crisis:
- IRS Non-Filer Portal for Stimulus Checks
- MA Unemployment for Self-Employed set to begin April 30, 2020.
- IRS Notice 2020-23 has sweeping extensions of items
- 2020 Q1 Estimates extended to 7/15 (same day Q2 is due!)
- 1031 Exchange deadline
- 2016 filing deadline extended to 7/15 to get your refund
April 9, 2020
April 7, 2020
- Payroll Deferment under the CARES act
- Updated Q&As: see below
April 6, 2020
April 3, 2020
April 1, 2020
March 30, 2020
- STRATEGY FOR GETTING THE MOST FROM THE STIMULUS CHECKS, AND THE FASTEST.
- WATCH OUT FOR STIMULUS SCAMS
March 28, 2020
March 27, 2020
- Sick Leave under Families First Coronavirus Response Act (FFCRA)
- Filing and payment delays: Federal and State
- Unemployment increased and expanded to Self-Employed – Coming soon!
- SBA lending for affected businesses – Coming soon!
March 20, 2020
March 19, 2020
~*~ FAQs ~*~
(hit ctrl+F to find a keyword on this page)
Q: I am self-employed. Do I qualify for unemployment?
A: YES. Under the CARES act, self-employed individuals also qualify for unemployment. But this is only during the coronavirus emergency.
Not all states may be ready for this change, so be patient if you have to wait to get this benefit.
> NOTE: all independent contractors, Real Estate agents, and home daycare providers are self-employed.
More Unemployment FAQs here
Q: I can only get $500 for my dependent son/daughter and they have wages. Should they file separately to get the full $1,200 and not claim them as a dependent?
A: NO. If you provide more than 50% of their support, you should not attempt this. It’s just not legal.
Also, you are giving up your own $500 other dependent credit, and if in college (and you qualify), you also lose the $2,500 education credit.
Q: The new CARES act says I don’t have to pay payroll taxes until later… Is this true? When are payroll taxes due?
A: see the information already provided in our interpretation of the law. If you use a payroll service provider, it is best to follow the payment due dates and deadlines that they set to avoid late fees and penalties, as they will have the latest information regarding any deferred payroll tax deadlines.
Q: How can I ensure I get my stimulus check right away?
A: File a tax return and use direct deposit or direct debit. Stimulus checks are based on your 2019 tax return. If you did not yet file a 2019 tax return, your 2018 tax return will be used. The quickest way to receive payment is if you entered direct debit or direct deposit information on your tax return. Otherwise, it can take months for a check to arrive in the mail. But WATCH OUT FOR SCAMS! There are many scams promising to get you your stimulus check faster, but they are really phishing for your information. Beware!
Q: The SBA loan asks for my Cost of Goods Sold. What if I don’t sell anything?
A: If you provide a service, your cost of goods sold (COGS) usually does not exist. But, as a service provider, your payroll (directed to providing that service) and fringe benefits can be considered COGS.
Q: We have multiple LLCs and businesses and many of them have the same owner(s). Can I apply for separate EIDL for each LLC?
A: The instructions I received state that if there are multiple businesses with a common owner, you can only apply for one EIDL for the common owner. You would list the common owner on the application. For any of the businesses with other owners, you are required to also list the other owners and, I assume, their ownership percentage.
This should hold true for the PPP loans as well.
Q: If the owners paid themselves via distribution instead of payroll, are those payments still eligible for a PPP loan?
A: NO. The distributions from a Partnership, LLC, or S corporation are a return of profits and not payroll. The PPP loan is to reimburse you for certain operating costs.
NOTE: Since Partnerships are not supposed to pay payroll to partners, any partnership payroll will not be allowable in the calculation.
Q: For an LLC that pays independent contractors, are those payments considered part of payroll, and therefore are eligible for EIDL/PPP?
A: NO: SBA guidance says independent contractors must file for their own EIDL or PPP. NOTE: This is a change from our previous guidance.
Q: Has the period of time been extended to complete a 1031 exchange?
A: I have not found anything in the law on extension of time for1031 exchanges. There has been a request by the 1031 community to the treasurer to extend but to date, nothing has changed.
Q: As the owner of my company, should I take myself off the Payroll?
A: If your goal is to cut costs, then lay yourself off and collect unemployment. If you want to take advantage of the PPP, you will have to rehire yourself and your employees for the 8-week period following the approval of the loan. More Unemployment FAQs here
Q: I am a daycare provider caring for Emergency Care Responders. The State will be providing me with a grant for the care. Is this taxable income?
A: At this time, we have not received any guidance on this matter. I would assume like all other state funding this would be taxable absent any other guidance.
Q: As a Daycare provider, I am still taking care of children. Can I also collect unemployment under the new self-employed guidance?
A: Like any other profession, if you are still working, you cannot also collect unemployment.
More Unemployment FAQs here
Q: I am on furlough. Can I collect unemployment?
A: Whether on furlough or laid off, you are unemployed and can collect. Once your state catches up with the new process, you should also qualify for the additional $600, which is only for 8 weeks.
Q: I am a sole proprietor. Does the salary I pay myself count toward a PPP loan?
A: As a sole proprietor, you don’t and can’t receive a salary for your business. The PPP loan works for Sole proprietors for others on your payroll, and you as follows:
- A Sole proprietor with no employees would use net earnings from self-employment.
- A sole proprietor with employees would use net earnings from self-employment less payroll costs, plus payroll costs.
E.g. Net earnings from self-employment = $100,000
Payroll cost in net earnings is $20,000
Payroll cost for employees is $20,000
Payroll costs for self employed is $80,000 ($100,000-$20,000)
Total payroll costs = $100,000
(Hey, I know this has the same answer but that is what the regulations state.) See CARES act provision: what you need to know for more information.
Q: If I create an LLC or Corp in 2020 and put myself on a salary, can I qualify for the PPP loan?
A: Very imaginative! Since the PPP loan amount is based on the prior 12 months’ information, I don’t see how that would work.
Q: Am I better off laying my employees off and collecting unemployment or keeping them on the payroll and getting the PPP loan?
A: It depends. You have to do the math. On unemployment, you and your employees will receive 50% of their pay up to a certain max for an extended period of time while on the PPP you will receive loan forgiveness for only 8 weeks of pay and you owe the remainder. After 8 weeks then what? Is the pay for idle work?
More Unemployment FAQs here
Q: I have an LLC/S-Corp and am the only employee. For purposes of the PPP and EIDL, do I apply as a business or as a sole proprietor?
A: Although I would have interpreted you as a business, it appears the SBA and most banks are treating businesses with a sole employee as Self-Employed. Don’t worry which you are. Fill in the paperwork based on the guidelines of your bank.