It’s easy to get caught up in the enormity of Covid-19, but take a breath and remember that we will get through this. With so many businesses feeling unsettled about the coming months, we have compiled some helps to get you and your business through this difficult time.
IRS Extension
The IRS and Treasury Department has confirmed that the federal income tax filing deadline is automatically extended from April 15, 2020 to July 15, 2020.
Taxpayers can also defer federal income tax payments due April 15, 2020 to July 15, 2020 without interest or penalties, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers as well as those that pay self-employment tax.
There is no need to file any additional forms or call the IRS to be eligible for this automatic federal tax filing and payment relief.
If you have a balance due, it is our recommendation to take advantage of the deferment and not pay your tax bill yet. It’s smart to hold onto your funds as long as possible as there is so much up in the air.
IRS has also postponed the deadline to pay 2020 1st quarter estimated tax payments to July 15, 2020.
The deadline to file with an extension is still September 15 for S-Corps, LLCs, and Partnerships, and October 15 for Corporations and individuals.
California State Tax Extension
The California Franchise Tax Board (FTB) has postponed the tax filing deadline to July 15, 2020. This includes:
2019 tax returns
2019 tax return payments
2020 1st and 2nd quarter estimated payments
2020 LLC taxes and fees
2020 Non-wage withholding payments
FTB is extending this relief to all California taxpayers, there is no need to claim any special treatment or call FTB to qualify for this relief. For additional information regarding FTB Covid-19 tax relief, please visit FTB’s website www.ftb.ca.gov and search Covid-19.
The deadline to file with an extension is still September 15 for S-Corps, LLCs, and Partnerships, and October 15 for Corporations and individuals.
EDD Payroll Tax Extension
Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension from EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return.
The deadline to file with an extension is still September 15 for S-Corps, LLCs, and Partnerships, and October 15 for Corporations and individuals.
California Department of Tax and Fee Administration (CDTFA)
With businesses trying to save money anywhere they can, the CDTFA has announced that you now have the option to file an extension to file and pay sales and use tax returns. The CDTFA has the authority to assist individuals and businesses impacted by complying with a state or local public health official’s imposition or recommendation of social distancing measures related to COVID-19, and it is now easier to request that relief. This assistance includes granting extensions for filing returns and making payments, relief from interest and penalties, and filing a claim for refund.
Requests for relief of interest or penalties or requesting to file an extension for filing a return may be made by contacting the CDFTA. If you are interested in taking advantage of this assistance, please visit https://www.cdtfa.ca.gov/services, or contact our office.
Work Sharing Unemployment Insurance Program
This California program allows for the payment of Work Sharing Unemployment Insurance benefits to individuals whose wages and hours have been reduced. The program is considered a temporary and practical alternative to layoffs.
How does Work Sharing Unemployment Insurance work? Benefits are paid weekly proportionate to the percentage of reduction in hours and wages. For example: An employee normally works a five-day workweek and is paid $500. If this employee’s workweek is reduced to four days, the employee’s weekly wages would be $400. This is a 20 percent reduction in wages and hours. The Work Sharing benefits for this employee are 20 percent of the Unemployment Insurance benefits the employee would receive if the employee were totally unemployed. If the employee’s weekly Unemployment Insurance benefit amount is $300, the employee would qualify for $60 in Work Sharing benefits. This results in a reduction in gross wages of only $40 for that week ($400 + $60 = $460). How is the Employer Charged? Employers are charged for Work Sharing Unemployment Insurance benefits in the same manner as for regular Unemployment Insurance benefits. There is no state withholding and no payroll taxes but Work Sharing is still subject to federal income taxes like regular unemployment benefits.
Any employer who has a reduction in production, services, or other conditions that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program. Employers can download the Work Sharing Plan Application, DE 8686 here: www.edd.ca.gov/pdf_pub_ctr/de8686.pdf.
SBA Loan Options
The U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans for working capital to California small businesses suffering substantial economic injury as a result of Covid-19. The SBA has said that the loans can be used to help with fixed debts, payroll, accounts payable and other bills. New guidelines announced this week include:
1.Faster, easier qualification process for states seeking SBA disaster assistance.
2.Expanded, statewide access to SBA disaster assistance loans for small businesses.
The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Applications can be filed via https://disasterloan.sba.gov/ela/.
IRA and HSA Contribution Deadline Extension
The IRS has issued clarification that the deadline for making IRA (Individual Retirement Account) and HSA (Health Savings Account) contributions for the 2019 tax year has been extended to July 15, 2020.
We’re Here For You
During this uncertain time, please feel free to reach out to us if you have questions or concerns. We are doing our best to get information out as we have it. Let’s all do our part to stay positive, help each other out, and stay healthy!