Axley & Rode, LLP

The Coronavirus Aid, Relief and Economic Security (CARES) Act made changes to excess business losses. This includes some changes that are retroactive and there may be opportunities for some businesses to file amended tax returns. If you hold an interest in a business, or may do so in the future, here is more information about the changes. Deferral of the excess business loss limits The Tax Cuts and Jobs Act (TCJA) provided that net tax losses from active businesses in excess of an inflation-adjusted $500,000 for joint filers, or an inflation-adjusted $250,000 for other covered taxpayers, are to be treated as net operating loss (NOL) carryforwards in the following tax year. The covered taxpayers are individuals, estates and trusts that own businesses directly or as partners in a partnership or shareholders in an S corporation. The $500,000 and $250,000 limits, which are adjusted for inflation for tax years beginning after calendar year 2018, were scheduled under the TCJA to apply to tax...

Employers should report the employee retention tax credit on their returns for the 2nd quarter of 2020. The Coronavirus Aid, Relief, and Economic Security (CARES) Act supports certain employers that operate a business during 2020 and retain employees, despite experiencing economic hardship related to the COVID-19 crisis. The refundable employee retention credit is equal to 50% of qualified wages (up to $10,000) paid to employees after March 12 and before Jan. 1. Employers that paid any qualified wages between March 13 and March 31 can include 50% of those wages together with 50% of any qualified wages paid during the second quarter of 2020 on their 2nd-quarter Form 941, 941-SS, or 941-PR.

A provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act raises the limits on business contributions of food inventories to charities. The law, signed on March 27, specifies that the donation must be made to a charity that will use it for the care of the ill, the needy or infants. The donation is deductible in an amount up to the basis plus half the gain that would be realized on the sale of the food (not to exceed twice the basis). For C corporations, the deduction can’t exceed 15% of income. For other companies, the deduction can’t exceed 15% of the taxpayer’s aggregate net income for that tax year from all trades or businesses. Additional rules apply; contact us.

It's no secret that, in coming weeks, the U.S. Treasury Dept. and the IRS will be sending out cash payments to eligible people to ease the economic impact of the coronavirus (COVID-19). Yet, confusion remains. In a press release, the agencies announced that Social Security (SS) beneficiaries (who don’t exceed income limits) qualify automatically for payments, even if they don’t otherwise have to file tax returns. For SS recipients who didn’t file 2018 or 2019 tax returns, the IRS will use information on Form SSA-1099 to distribute up to $1,200 payments in the same way recipients get their monthly SS benefits, either by direct deposit or paper check. Here’s more:  https://bit.ly/3dQuaRu

Relief is granted for failing to make employment tax deposits due to coronavirus (COVID-19). IRS Notice 2020-22 provides relief to employers entitled to refundable tax credits under the Families First Coronavirus Response Act (FFCRA) and the “Coronavirus Aid, Relief, and the Economic Security (CARES) Act.” Normally, tax law imposes a penalty for failing to deposit amounts as required on prescribed dates, unless there is reasonable cause. There’s now relief from the penalty for failing to timely deposit employment taxes to the extent the amounts are equal to or less than the refundable tax credits an employer is entitled to under the FFCRA and the CARES Acts. Contact us for more info.

When will coronavirus (COVID-19) payments from the government arrive? Do you have questions about the CARES Act’s “economic impact payments?” For eligible individuals, these are up to $1,200 for singles and $2,400 for married couples filing jointly (plus $500 for each eligible child). The IRS has announced that the distribution of payments will begin in the next three weeks and will be distributed automatically, with no action required for most taxpayers. However, people who didn’t file 2018 or 2019 federal income tax returns will need to submit “a simple tax return” to receive a stimulus payment. Contact us for help filing a return. For more information:  https://bit.ly/2R2DDeR

The CARES Act, authorizes a $300 “above-the line” charitable tax deduction for individuals who don’t itemize. This will give a slight boost to taxpayers who donate to charity and the charities they donate to. The new law adds the deduction for tax years starting in 2020. For the last couple of years, under the Tax Cuts and Jobs Act, only individuals who itemized could get a deduction for charitable gifts, and far fewer individuals have been itemizing because of the increased standard deduction. The new deduction only applies to cash contributions. The contribution can’t be used to establish a donor-advised fund or maintain an existing one.

The CARES Act contains several new Small Business Administration (SBA) loan and debt relief programs, including the Paycheck Protection Program, Economic Injury Disaster Loans and SBA debt relief for small and large businesses suffering economic damage because of the coronavirus (COVID-19) pandemic. A new SBA website details the new programs and loans and provides online applications for Economic Injury Disaster Loans and Low-Interest Disaster Loans. The site also includes information about the Express Bridge Loan Pilot Program, which allows small businesses who currently have a relationship with an SBA Express Lender to access up to $25,000. Visit the site at  https://bit.ly/2JwY3bC

On March 27, President Trump signed another coronavirus (COVID-19) relief law titled the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Among other things, the CARES Act provides recovery rebates of up to $1,200 for singles and $2,400 for married couples filing jointly (plus $500 per qualifying child) subject to income-based phaseouts. It also waives the 10% penalty tax on early retirement account withdrawals for COVID-19-related distributions and temporarily waives the required minimum distribution rules for certain retirement accounts. Contact us for more information.

A new law signed by President Trump on March 27 provides a variety of tax and financial relief measures to help Americans during the coronavirus (COVID-19) pandemic. This article explains some of the tax relief for individuals in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Individual cash payments Under the new law, an eligible individual will receive a cash payment equal to the sum of: $1,200 ($2,400 for eligible married couples filing jointly) plus $500 for each qualifying child. Eligibility is based on adjusted gross income (AGI). Individuals who have no income, as well as those whose income comes entirely from Social Security benefits, are also eligible for the payment. The AGI thresholds will be based on 2019 tax returns, or 2018 returns if you haven’t yet filed your 2019 returns. For those who don’t qualify on their most recently filed tax returns, there may be another option to receive some money. An individual who isn’t an eligible individual for 2019 may be...

On March 27, President Trump signed into law another coronavirus (COVID-19) law, which provides extensive relief for businesses and employers. Here are some of the tax-related provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  Employee retention credit The new law provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis. Employer eligibility The credit is available to employers with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers that have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis. The credit isn’t available to employers receiving Small Business Interruption Loans under the new law. Wage eligibility   For employers with an average of 100 or fewer full-time employees in 2019, all employee wa...

As many Americans are forced to stay home to help stop the spread of the coronavirus (COVID-19), businesses are losing revenue and having to lay off employees. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes provisions to help businesses survive, including a new employee retention tax credit; deferral of the employer portion of payments of certain payroll taxes; a modification of the net operating loss rules by providing a five-year carryback and temporarily removing the 80% limitation for carryforwards; changes to the business interest deduction; and an expansion of the ways the Small Business Administration can help small businesses. Contact us for details.

Late on March 25, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) by a vote of 96-0. The bill, which provides $2 trillion in coronavirus (COVID-19) relief, will now move to the U.S. House of Representatives for consideration. The House is expected to vote on the bill on March 27. The proposed law contains a wide variety of relief, including small business loans, expanded unemployment aid, $100 billion for hospitals and health systems, funds for industries hit by the virus and direct cash payments to individuals under a certain income threshold. We’ll provide more information as it becomes available.