The CARES Act: - What Does IT Mean For You?- Created by Avitus Group
Today’s Presenters Natalie McGill Scott Stevenson Senior Human Resources Consultant Director of Tax Services nmcgill@avitusgroup.com sstevenson@avitusgroup.com
Today’s Agenda 1. Families First Coronavirus Response Act - Paid Sick Leave - Expanded Family and Medical Leave 2. CARES Act - Stimulus Checks - 401k / Retirement - Unemployment Benefits - Tax Implications
FFCRA Families First Coronavirus Response Act » Paid Sick Leave » Expanded Family and Medical Leave
What does the law say? Families First Coronavirus Response Act 03. 04. 01. 02. 05. 06. Has been Is experiencing Is caring for an Is caring for a child Is experiencing Subject to a advised by a COVID-19 individual subject to whose school or any other Federal, State or health care symptoms and is an order described place of care is substantially- local quarantine provider to self- seeking medical in (1) or self- closed (or child care similar condition quarantine diagnosis quarantine as is unavailable) for specified by the or isolation related to described in (2) reasons related to Secretary of order related to COVID-19 COVID-19 Health and Human COVID-19 Services, Labor and Treasury
Emergency Paid Sick Leave Provides up to two weeks (80 hours/10 days or a part time employee’s two week equivalent) of paid sick leave Paid at 100% for qualifying reasons 1 to 3, up to $511 daily and $5,110 total Paid at 2/3 pay for qualifying reason 4 to 6, up to $200 daily and $2,000 total
Expanded Family and Medical Leave (eFMLA) Provides up to ten weeks of paid sick leave and expanded family and medical leave for qualifying reason #5, to care for your child whose school is closed and child care is not available Paid at 2/3 pay for qualifying reason #5, up to $200 daily and $10,000 total
How Will This be Paid? Payments are considered regular wages (does not count toward overtime) Employers will receive a payroll tax credit from the IRS (details to come) Any Exceptions? Employers with fewer than 50 employees may qualify for an exemption to provide the eFMLA. The Department of Labor (DOL) has not released guidance
How Will Employees be Notified? » DOL has released the required poster in both English and Spanish ▶ Please post this as soon as possible, but no later than tomorrow » This only applies to current employees. If an employee is on furlough or lay-off, they are not eligible for the pay. » The new law expires on December 31, 2020, and any unused time is not required to be cashed out.
Refusal to Work » Consult with your HR Consultant or legal professional » Does the employee have an accommodation under ADA (Americans with Disability Act) or regular FMLA or other leave? » Generally, if you have work available, they would not be eligible for unemployment
CARES Coronavirus Aid, Relief, and Economic Security Act » Stimulus Checks » 401k / Retirement Accounts » Unemployment Benefits » Tax Implications
CARES ACT Stimulus Checks • The check amount is based on adjusted gross income (AGI) If filing single, and your AGI is $75,000 or less o If filing as head of household and your AGI is $112,500 or less o If married and AGI is $150,000 or less o Payment is $1,200 for each adult or $2,400 for per married couple o • Payment for children 16 or younger if $500 for each qualifying child • Payment is reduced by $5 for every $100 in income over these thresholds
CARES ACT 401k / Retirement – for 2020 calendar year ▶ Can take a distribution of up to $100,000 and there are no penalties • Standard 20% federal withholding is not required • Three year payback or spread out the income taxes ▶ Required Minimum Distribution (RMD) • RMD - the amount at age 72 you are required to withdraw each year • Not required in 2020 for IRAs, 401k, or 403b ▶ 401k Loans • Maximum loan amount increased from $50,000 to $100,000 • Increased maximum loan amount available for 180 days • Delay loan repayment for up to 12 months
CARES ACT Unemployment » Benefits Expanded ▶ Up to an extra $600 per week (based on previous income), on top of employee’s regular state unemployment amount • Through July 31 st ▶ Additional 13 weeks of benefits on top of regular state unemployment, after their state unemployment ends ▶ Self-employed / 1099 / gig workers are now eligible based on income from prior year’s tax returns » Unemployment is subject to taxes
CARES Tax Implications in the Wake of the CARES Act
Tax Law Changes from March 15, 2020 through adoption of the CARES ACT Before the CARES Act » Changes put in place recently: ▶ Tax filing date for individuals, trusts, and corporations: • Federal = July 15, 2020 • States = call us for updated information ▶ 2019 taxes due (federal) – pay by July 15, 2020 without penalties or interest ▶ 2020 individual, trust and corporation estimated taxes (federal) – pay by July 15, 2020 ▶ Make 2019 contributions to IRA (traditional or Roth) or HSA – contribute by July 15, 2020 ▶ People First Initiative: IRS suspends collection actions and delays required submissions to July 15, 2020
CARES Act Tax Law Changes With the Passing of the CARES Act » Individual Tax Relief: ▶ In addition to what Natalie has covered, individuals may take a deduction, starting this year, for charitable contributions up to $300 without itemizing ▶ Payments made by an employer to reduce or retire an employee’s student loans up to $5,250 per year is not included in the employee’s income. ▶ Expanded HSA covered costs to include telehealth services and some previously over-the-counter non-prescription medications ▶ Deduction limits for excessive business losses for individual taxpayers will not apply for tax years 2018 – 2020 ▶ Also, remember that all payments for unemployment to employees is taxable for federal income tax purposes
CARES Act Tax Law Changes With the Passing of the CARES Act » Business Tax Provisions ▶ Employer FICA contributions are deferred until 2021 and 2022 ▶ 100% of net operating losses in 2018 – 2020 may be carried back five years ▶ Qualified improvement property placed in service after September 2017 now qualifies as 15 year recovery property. Now eligible for 100% Bonus Depreciation ▶ Any loan under the Payroll Protection Program that is forgiven is excluded from income in 2020
CARES Act Tax Law Changes With the Passing of the CARES Act » Business Loans – updated and new ▶ SBA Economic Injury Disaster Loan Program (EIDL) – expanded eligibility and easier to complete the filing. Grant (advance) of up to $10,000 may be requested and is not required to be repaid. Updated application process is available online. See Helpful Resources for new link. ▶ Any loan granted under EIDL may be refinanced under a loan issued under the Paycheck Protection Program. ▶ Paycheck Protection Program – loan based on average monthly costs incurred during the period from 2/15/20 through 6/30/20. 2.5 times the average monthly cost, as computed, plus any balance on an EIDL unpaid at the time of the covered loan origination. Capped at $10,000,000. ▶ Expanded eligibility. Self-employed can apply.
CARES Act Tax Law Changes With the Passing of the CARES Act » Business ▶ Loan proceeds used for approved expenses during eight week period following the origination of the loan will be eligible for forgiveness ▶ Any amounts unpaid after forgiveness convert to a loan with a maximum term of 10 years and rate of no more than 4% ▶ Loan forgiveness is determined by calculating eight weeks of qualifying expenses (incurred and paid), documented and reduced by any loss of employees and/or salaries for those employees. The eight week period starts when the loan is originated. The reductions can be mitigated or eliminated by rehiring by June 30, 2020.
Helpful Resources SBA Disaster Loan Assistance https://covid19relief.sba.gov/#/ IRS Coronavirus Tax Relief https://covid19relief.sba.gov/#/ https://www.irs.gov/coronavirus Department of Labor Required Posting and FAQs: https://www.dol.gov/agencies/whd/pandemi c Avitus Group COVID-19 Resources www.avitusgroup.com/covid-19/
Questions What’s on Your Mind?
THANK YOU Co-Employment Recruiting Branding & Marketing Insurance Services Payroll Administration Accounting Tax Planning & Preparation Natalie McGill Human Resources nmcgill@avitusgroup.com Benefits Administration Safety & Risk Management Scott Stevenson Information Technology sstevenson@avitusgroup.com Professional Acceleration Avitus Dental Management
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