Corona Virus Tax Relief
Coronavirus (Covid-19) pandemic is impacting every individual and small business. Most of the businesses are moving in the downward direction. Many cities, states, and parts of the country are under lock-down order. Most nonessential businesses are closed, and people are working from their homes if they are not laid off from their jobs. The stock market has come down almost by thirty-five percent. All international travel has been banned to curb the spread of the Corona Virus. All hotels and motels are having almost no occupancy. Domestic air travel has almost stooped. Cruise lines have canceled all planned cruises as social distancing is not possible on cruises and travelers are getting infected with the Covid-19 virus. All restaurants are closed for dining, only take-out service is permitted. Considering lockdown of cities, counties, and states IRS has extended the filing date for the year 2019 taxes from April 15 to July 15 (for 90 days). Individuals and businesses don’t have to pay any owed taxes also until July 15th. There will not be any penalty and interest for the taxes owed for the year 2019 until July 15th. To help all small businesses and avoid mass unemployment in the country, the US Govt. has passed a $2 Trillion financial package to aid all businesses having up to 500 employees. To help further every person filing taxes as a single person will get $1200 if the individual’s income is less than $75,000 and $2400 for people filing as married jointly. However, this incentive goes to zero for individuals who are making more than $99,000 and $198,000 for married filing jointly. In addition, for every qualifying child, the taxpayer will receive an additional $500. So, a family of 4 can expect to get $3400 as a Covid-19 stimulus check. Additionally, $300 of cash donations to charity could be deducted by nonitemizers.
Employers could defer payment of their share of social security tax. Half of the deferred amount would be due on Dec. 31, 2021, and the other half on Dec. 31, 2022. Employers would still have to deposit the employee’s share in time. This payroll relief would also apply to self-employed individuals. Businesses would get a five-year carryback of net operating losses.
US Govt. is working hard to enforce social distancing to stop the spread of the Corona Virus. The CARES Act will help small businesses financially so that they do not file bankruptcy and keep their employees employed. Initially, all small businesses will get the funding as an SBA loan, but this loan doesn’t have to be paid back if businesses use the funds for the payroll of employees, rents, mortgages and utility expenses. This financial aid program is called Payroll Protection Program (PPP). An employer will have to contact an SBA-approved bank to get money under this program.
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