New Tax Relief Notices Announced by the IRS

New Tax Relief Notices Announced by the IRS

Notice #1: Additional Returns Postponed

As previously announced, the IRS has provided filing and payment relief for federal income tax returns and payments due April 15, 2020. Last week, additional automatic (no application required) tax-filing and payment-deadline relief — also now July 15, 2020 — was announced in a new notice issued by the IRS. Notice 2020-23 applies to individuals, partnerships, trusts, estates, corporations and other noncorporate tax-filing entities filing Forms 1120, 1065, 1066, 1041, 706 and 709, among others.

Notice #2: Estimated Tax Payments Postponed

The IRS has also postponed the June 15 deadline for second quarter Estimated Tax Payments to July 15. Now, both first quarter AND second quarter estimated taxes are due on July 15, 2020.

Notice #3: New Employee Retention Credit Announced

The IRS announced a new Employee Retention Credit for businesses. This new relief option is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages a business pays to employees between March 12, 2020, and January 1, 2021. Eligible employers get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.

For each employee, wages (including certain health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming deposits or requesting an advance credit on Form 7200, Advance of Employer Credits Due To COVID-19.

Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and experience either:

  • the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
  • a significant decline in gross receipts (50% less than the prior year’s quarter).

The definition of qualified wages varies depending on if you have more than or less than 100 full-time employees. And the credit is also impacted if you take advantage of other relief provisions, such as the Paycheck Protection Program.

If you’re not sure if you qualify for this new Employee Retention Credit, please contact us. We can help you determine the best relief program for your business.

What You Need to Know About Unemployment

What You Need to Know About Unemployment

Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, unemployment payment amounts will increase, more folks will qualify, and benefits will be available longer.

Previously, only those workers who receive W-2s from their employer qualified for unemployment benefits. However, with the new Pandemic Unemployment Assistance (PUA) through the CARES Act, folks who are self-employed, gig workers, 1099 independent contractors or have a limited work history can now also file for unemployment benefits.

The normal unemployment application is being modified for these types of workers and is now available on the Georgia DOL website. If you have already filed a claim with the GDOL and will be eligible to potentially receive benefits under this program, you do NOT have to refile your claim. Instead, you will be sent an email with a link to provide additional information for the PUA Program.

Other Important Details

GDOL expects to start distributing an additional $600 from the Federal Pandemic Unemployment Compensation next week. This would be added on top of Georgia’s existing unemployment benefits package, which ranges from $55 to $365 weekly. So, the most someone could receive weekly is $965 with the federal and state packages combined.

  • The Georgia DOL time period for receiving unemployment benefits has been extended from 14 weeks to 26 weeks.
  • With the CARES Act, the time period could increase 13 more weeks.
  • UI recipients can earn up to $300 per week before earnings begin to count against their benefits.
  • If your employer files the unemployment claim for you (the preferred method), you should receive your first payment within a week or so. If you file a claim yourself, it could take up to three weeks.
  • Payments will arrive via a “Way2Go” Debit MasterCard that has been sent to you or by direct deposit.

You can visit the GDOL website to access an application and follow step-by- instructions and video tutorials on applying for unemployment.

The Georgia Department of Labor processed 390,132 unemployment claims during the week of March 29-April 4 — more claims in seven days than were processed in all of 2019! And the U.S. Department of Labor announced that around 10% of the total American workforce are currently unemployed.

Answers to Your Tax Questions Amid the COVID-19 Crisis

Answers to Your Tax Questions Amid the COVID-19 Crisis

You have questions? We have answers … well, mostly we do! With all the changes to the current tax season, the IRS and the State of Georgia are constantly updating details and requirements. To help condense some of this information, we’ve answered some of the more relevant questions below.

Q: What is tax relief?

A: Both the IRS and the State of Georgia have announced an automatic delay in the tax-filing and tax-payment deadline — from April 15, 2020, to July 15, 2020. You do not have to file an extension for this. You must just file and pay any tax due with your return no later than July 15.

Q: Who is eligible?

A: The extended deadline applies to individuals, trusts, estates, corporations and other types of business entities that normally have a federal income tax return or payment due on April 15, 2020. It does not apply to federal income tax returns and payments due on any other date. Note that this does apply to both 2019 federal and state income tax payments (including payments of tax on self-employment income) AND 2020 estimated federal and state income tax payments (including on self-employment income).

Q: Can I still file an extension for a due date AFTER July 15, 2020?

A: Yes, you can request an extension by filing Form 4868 (businesses and trusts file Form 7004) by July 15, 2020. In this case, your tax return will be due on October 15, 2020. To avoid interest and penalties when filing your tax return after July 15, 2020, however, you must pay any estimated tax due by July 15.

Q: What if I already filed my 2019 income tax return?

A: If you have already filed and owe taxes, then you must pay your taxes in full by July 15, 2020. Interest and penalties will begin to be charged after July 15 for any amount remaining unpaid by that date. If you have already scheduled a payment for April 15, 2020, note that the payment will not be automatically rescheduled unless you change it. There are several ways to do this depending on how you scheduled the payment. Please contact us for assistance.

Q: Do I have more time to contribute money to my IRA for 2019?

A: Yes. Because the due date for filing federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.

Q: How are payroll, excise and other taxes affected?

A: Normal filing, payment and deposit due dates continue to apply to both federal payroll and excise taxes. In Georgia, no extension is provided for the filing, payment or deposit of any other type of state tax (including employee withholding and sales tax), or for the filing of any state information returns.

However, all Georgia vehicle registrations that expire between March 16, 2020, and May 14, 2020, have been extended through May 15, 2020. This extension applies to all annual registrations, including personal passenger vehicles, commercial vehicles, vehicles registered in the International Registration Plan (IRP), and Temporary Operating Permits (TOPs) issued at the time of a vehicle purchase.

Q: How are 1st and 2nd quarter 2020 estimated tax payments handled?

A: First quarter 2020 estimated tax payments normally due on April 15, 2020, may be postponed until July 15, 2020 (if needed). However, second quarter 2020 estimated income tax payments are still due on June 15, 2020. Only first quarter 2020 estimated income tax payments are currently postponed.

As you can imagine, there is still much confusion regarding the tax changes related to the COVID-19 pandemic. We’re here to help — please feel free to email Jackie or give us a call at 706-632-7850 with your questions.

And remember, we will continue to work on tax returns in the order they are received. While our previous drop-off deadlines no longer apply, we still encourage you to provide us with your paperwork as soon as you are able, especially if you are expecting a refund. You do NOT have to come inside our office to give us your paperwork. You may email it to us or simply drop it in our dropbox outside our office.