The CARES Act: - What Does IT Mean For You?- Created by Avitus - - PowerPoint PPT Presentation

Created by Avitus Group

The CARES Act:

• What Does IT Mean For You?-

Scott Stevenson

Director of Tax Services

sstevenson@avitusgroup.com

Natalie McGill

Senior Human Resources Consultant

nmcgill@avitusgroup.com Today’s Presenters

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

»

Paid Sick Leave

»

Expanded Family and Medical Leave

FFCRA

Families First Coronavirus Response Act

What does the law say?

Families First Coronavirus Response Act 01. 02. 03. 04.

Subject to a Federal, State or local quarantine

• r isolation
• rder related to

COVID-19 Has been advised by a health care provider to self- quarantine related to COVID-19 Is experiencing COVID-19 symptoms and is seeking medical diagnosis Is caring for a child whose school or place of care is closed (or child care is unavailable) for reasons related to COVID-19 Is caring for an individual subject to an order described in (1) or self- quarantine as described in (2) Is experiencing any other substantially- similar condition specified by the Secretary of Health and Human Services, Labor and Treasury

05. 06.

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

»

Stimulus Checks

»

401k / Retirement Accounts

»

Unemployment Benefits

»

Tax Implications

CARES

Coronavirus Aid, Relief, and Economic Security Act

Stimulus Checks

• The check amount is based on adjusted gross income (AGI)
• If filing single, and your AGI is $75,000 or less
• If filing as head of household and your AGI is $112,500 or less
• If married and AGI is $150,000 or less
• Payment is $1,200 for each adult or $2,400 for per married couple
• 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 31st

▶ 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 ACT

CARES

Tax Implications in the Wake 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

Tax Law Changes from March 15, 2020 through adoption of the CARES ACT

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

»

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

With the Passing of the CARES Act

CARES Act Tax Law Changes

»

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.

With the Passing of the CARES Act

CARES Act Tax Law Changes

»

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.

With the Passing of the CARES Act

CARES Act Tax Law Changes

https://covid19relief.sba.gov/#/ SBA Disaster Loan Assistance

https://covid19relief.sba.gov/#/

IRS Coronavirus Tax Relief

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/

Helpful Resources

What’s on Your Mind?

Questions

THANK YOU

Scott Stevenson sstevenson@avitusgroup.com Co-Employment Recruiting Branding & Marketing Insurance Services Payroll Administration Accounting Tax Planning & Preparation Human Resources Benefits Administration Safety & Risk Management Information Technology Professional Acceleration Avitus Dental Management Natalie McGill nmcgill@avitusgroup.com