COVID-19 Legislation Summary

~ Partners – Deluzio & Company, LLP ~

Individual and Business Taxes: the filing deadline for Federal, Pennsylvania and Local tax returns for businesses and individuals originally due April 15, 2020 has been extended to July 15, 2020. In addition 2019 tax payments, including first quarter 2020 estimated tax payments, originally due on April 15, 2020 are now due July 15, 2020. Pennsylvania has extended the deadline for the 2nd quarter estimated tax payment to July 15, 2020, but the IRS is still due June 15, 2020 at this time.

CARES Act:

Business Relief:

  • Forgivable Paycheck Protection Program (PPP) Loan: The CARES Act created a new loan to be administered by local banks to assist with payroll, utility and some overhead costs of employers with less than 500 employees. The loan is generally limited to the lesser of $10MM and 2.5 times monthly payroll costs and is forgiven if certain conditions are met regarding how the proceeds are spent and employment levels. Please contact your local financial institution for additional information and see US Chamber of Commerce Emergency Loans Guide for additional information.
  • Employee Retention Credits: Under the CARES Act, employers may be eligible for a refundable credit against employer payroll taxes for 50% of certain wages paid to employees during the COVID-19 crisis.
  • Payroll Tax Deferral: In addition to potential SSI employer tax credits, the CARES Act provides for deferral of payment of the employer’s share of the 6.2% Social Security tax on wages, including a portion of self-employment taxes, through December 31, 2020. These deferrals will be payable by December 31, 2021 and 2022.
  • Business Interest Deduction: The CARES Act adjusted provisions from the 2017 Tax Cut and Jobs Act (TCAJA) limiting interest deductions.
  • Suspension of Non-Corporate Loss Limitation: the CARES Act delayed the effective date of the limitation of active net business losses in excess of $250k ($500k if married filing jointly) to tax years beginning after December 31, 2020. These losses were disallowed by the TCAJA and were treated as loss carryforwards.
  • Net Operating Losses: the CARES Act removed provisions of the TCAJA that disallowed carry back and limited usage to 80% of taxable income of certain operating losses incurred prior to 2021.
  • Student Loan Repayment-Employee Education Assistance: Employers may be able to provide tax free student loan repayment benefit programs to employees up to $5,250.

Individual Relief and Assistance:

  • Recovery Rebates for Individuals: The CARES Act provides rebates of up to $1,200 for individuals and $2,400 for joint files, plus an additional $500 for each child under the age of 17 for US Taxpayers. These rebates are phased out beginning with tax payers with adjusted gross income in excess of $75,000 for individuals and $150,000 for joint filers based on the last available tax return filed.
  • Unemployment Benefits: The CARES Act extended certain unemployment benefits for up to 13 weeks and provides eligible employees an additional $600 per week for up to 4 months.
  • Retirement Plans: The Cares act waives the Required Minimum Distributions for 2020 for certain plans and allows for certain distributions to be penalty free.
  • Student Loans: Payments of principle and interest for certain federal student loans is suspended and are treated as made for consumer credit reporting purposes.