Businesses tax relief in bipartisanly-approved COVID-19 bill
Saturday, March 14, 2020
The House-passed H.R. 6201, Families First Coronavirus Response Act does not — I repeat, does NOT — include a change in the upcoming federal tax filing and payment deadline. That did happen, but separately, as detailed in my April 15 Tax Day deadline and delay Q&A post.
There's also no change to the payroll taxes that come out of our paychecks.
So right now, expect your regular pay to remain the same. And keep working on those federal tax forms with April 15 as your deadline.
What we do know, however, is that legislation to deal with coronavirus' health and economic effects is making its way through Congress and that it does contain some tax provisions.
UPDATE, Wednesday, March 18, 2020: The House approved H.R. 6201 on March 14 and passed a series of technical changes on March 16. The Senate this afternoon passed the House bill. Donald J. Trump signed it into law later in the day.
Tax breaks for businesses: The tax highlights of the coronavirus bill are for businesses, specifically two credits for employers.
The first tax credit would be for a maximum of $5,110 per employee to cover employers' costs of providing up to two weeks (10 workdays) of paid coronavirus-related sick leave to workers. That time-off provision is mandated separately under the Emergency Paid Sick Leave Act portion of the coronavirus bill. The credit applies to the employer portion of the Social Security payroll tax and any excess is refundable to the business.
A similar second tax credit of a maximum $10,000 per employee would compensate companies for providing paid coronavirus-related family leave to employees. Again, this leave requirement also is part of H.R.6201. And also like the paid sick leave credit, this family leave credit would be allowed against the total Social Security payroll taxes imposed on the employer and would be refundable.
The paid leave portion of the bill, however, applies only to companies with 500 or fewer employees.
It also prohibits double dipping by not allowing an employer to claiming both a deduction for sick leave and/or family leave and the associated credit(s).
Both credits would apply only to qualified sick and family leave wages paid within one year of the bill's enactment. The Treasury Secretary would have the discretion to grant as many as 15 additional days.
And all you self-employed folks who find you can't work because of self-quarantine, not to worry (so much). The bill extends that credit's benefit to you, to, as well as the one for family leave if you have to take time off to care for someone affected by COVID-19.
As for any funding the Social Security program might lose due to these credits, the coronavirus measure calls for the money to be transferred from the federal government's general fund. Overall, the bill was designated as emergency spending and does not include tax or spending offsets.
Republicans on the House Ways and Means Committee also prepared the table below with more on the business tax credits.
The Congressional Research Service also has an overview of the bill's leave and unemployment provisions, as does the Joint Committee on Taxation's technical explanation.
Related nontax provisions: As noted, the time off work for which the credits apply are part of the coronavirus bill.
It mandates 14 paid sick days for most employees and three months of paid emergency family and medical leave covering at least two-thirds of an employee's wages for the duration of the coronavirus crisis.
That duration, however, is not indefinite. Under pressure from the GOP and White House, but bill provides that the emergency leave provisions will expire in one year. It also offers exemptions for smaller businesses.
In addition, the House bill also:
- Funds an increase in state unemployment insurance programs,
- Provides more than $1 billion in nutrition aid,
- Allows closed schools to continue providing free and reduced meals to eligible students,
- Offers flexibility for the food stamps program,
- Increases the portion of Medicaid spending paid by the federal government, and
- Guarantees free coronavirus testing to individuals as long as a doctor orders the test.
Not law yet: Keep in mind that although H.R. 6201 easily cleared the House at chamber — 363-40 with Independent Rep. Justin Amash of Michigan voting "present" — and Trump has tweeted his support of the measure, the Senate must vote. That's expected to happen early next week. (As noted at the top of this post, it did.)
It's possible, although not likely, some changes could be made in the Upper Chamber. (No changes. The Upper Chamber passed the bill by a 90-8 margin.)
Meanwhile, sit tight — at appropriate social distances, of course — and take care. Your and your families' health is much more important than any tax considerations.
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
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