New Tax Law and Stimulus Package Developments

We wanted to share a good summary for you to review as well as links from our friends at Clark Rasmussen Taylor CPAs

SBA Loans

• SBA 7(b) Emergency loans (known as EIDL)
  • $10,000 grant with 72 hours of receipt of your application.  Must qualify by having economic damages to your business.  This is a grant, not a loan and does not need to be paid back.
  • Disaster loans up to $2M
    • First phase of loans up to $500,000, 3.75 fixed rate, 10-30 yr loan
  • Processed through the SBA website, https://www.sba.gov/funding-programs/loans
• SBA 7(a) Paycheck Protection Plan loans
  • Processed through local banks approved by the SBA
  • You apply for the loan at a bank using the criteria established by the SBA: https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/general-small-business-loans-7a/7a-loan-application-checklist%20
  • Loans will be forgiven if used for payroll, lease payments, utilities
  • Payroll taxes deferred up to two years
  • Total amount of loan equal approximately 2.5 times your monthly average payroll
  • Estimated start to the loan origination is May 1. Contact your lender as soon as possible to get an appointment.\

Tax Provisions

• Dependent care and sick employee payroll tax credit
  • If over 50 employees, you must pay employees for sick leave or dependent care time off for up to 10 days.
  • The payroll tax credit is up to $2,000 per employee for taking care of a child, $5,110 for caring for a sick relative or if employee is sick.
• Rebate checks
  • The IRS estimates the checks will be sent about three weeks after the bill is passed, so they should start arriving around the middle of April.
  • The check amount will be $1,200 for adults (so married couples will get $2,400) plus $500 per child.
  • The rebate amounts phase out at $75,000 for single filers or $150,000 for married filers.
  • The rebate check is based on your 2019 tax return. If you have not filed a 2019 tax return yet, the check will be based on your 2018 tax return.
  • The bill itself does not have much detail on the specifics of how the checks will be disbursed, so Google will be a good resource as more details are known. Here is a good article from a reliable resource that answers some questions about the checks: https://www.kiplinger.com/article/spending/T063-C000-S001-stimulus-checks-2020-how-much-when-and-other-faqs.html
• Suspension of 10% penalty for early withdrawal from retirement plans
  • To help with those needing money during this time, the tax law temporarily waives the 10% penalty for early withdrawals from qualified retirement plans up to $100,000 for those impacted by coronavirus-related issues.  Here is a good article with more information: https://www.cnbc.com/2020/03/25/what-the-senate-coronavirus-relief-bill-means-for-your-retirement.html

Unemployment Benefits

• Unemployment benefits to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, seeking part-time employment, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency. The bill provides an additional $600 per week payment to each recipient on top of the normal benefits.
• Here is a good article with more information: https://www.cnbc.com/2020/03/26/coronavirus-relief-bill-what-to-know-about-unemployment-benefits.html