16 Ways Businesses and Individuals Can Find Funds and Tax Relief for COVID-19 - Carol L. King & Associates April 15, 2020

16 Ways Businesses and
Individuals Can Find Funds and
Tax Relief for COVID-19
 Carol L. King & Associates
 April 15, 2020

Overview

Historic measures taken
CARES Act – where does the $ comes from and
 where does it go?
Help with Payroll
Help Keeping the Business open
Other Tools Available

Nothing is simple
 Families First Coronavirus Response Act providing employers tax credits
  for paid sick and family leave. Effective April 1 – December 31, 2020.
 Then on March 26th, the Coronavirus Aid, Relief, and Economic Security
  (CARES) Act became law, with a $2.3 trillion relief package aimed at
  blunting some of the effects of the economic slowdown and partial
  shutdown resulting from the coronavirus pandemic.
 They’re designed to relieve two main business problems:
   Liquidity
   Employee retention
 And to give individuals cash to spend on goods and services.

Tax Filing Deadlines Changed

Federal tax returns and payments moved to July 15
  No penalties of interest from April 15 to July 15

Most states have followed Federal
  NCDOR can’t waive interest, but deadlines moved
   and penalties waived. This will be addressed in
   upcoming legislative session.

3 Types of Help with Payroll

Paycheck Protection Program (PPP) loans. Apply
 through your bank or a non-bank lender.
*50% refundable tax credit to businesses that keep
 employees on the payroll while their operations are
 fully or partially suspended
*Delayed payment of employer share of tax (6.2%)
 until ½ due 12/31/2021, ½ due 12/31/2022
  *You may not apply for these if you accept a PPP loan

Employee Retention Credit
50% of "Qualified Wages" Up To $10,000 Per Employee Paid
 From 3/13/20 - 12/31/20 during period In which Operations
 Are
  1) Fully or Partially Suspended OR
  2) Quarter for which Employer has more than 50% reduction
   in Gross Receipts
  Reduce Payroll Deposits by Credit and apply for refund of
   balance on Form 7200.
  Credit does not apply if receiving Paycheck Protection Loan

Paycheck Protection Program (PPP)
 Administered through banks. Applications also processed
  by non-bank lenders
 Broad eligibility, no collateral or guarantees
 1% interest rate, 2 year term, 6 months until 1st payment due
 Provides loans up to 2.5 borrower’s average monthly payroll
  costs, up to $10 million
 May be used for payroll, mortgage interest, rent, utilities
 Must be made by June 30, 2020 (filed electronically)
 More info at home.treasury.gov/coronavirus

PPP - Calculating Payroll Costs
Average payroll costs includes:
  Gross payroll including commission + payments for
   group health benefits + payment of vacation, family or
   sick leave +severance + retirement plan benefits + SUTA
     Exclude salary and compensation over $100,000

  Payments to independent contractors NOT included,
   but independent contractors can apply, themselves.

PPP Loan Forgiveness
 Based on costs incurred during 8 weeks after loan is made
 Reduced in proportion to reduction in FTEs
 Reduced if employee pay is decreased by >25%
 No more than 25% of loan forgiveness may be used for non-
  payroll costs
 Any amount forgiven is NOT taxable
 Must certify that current economic uncertainty makes loan
  request necessary to support the current operations of the
  applicant.

Resources for PPP Loan

Your Bank            Fundera
PayPal               Lendio
Quickbooks Capital   SmartBiz
Kabbage              Credibility Capital
Funding Circle       Standard Capital
BlueVine             OnDeck

3 Types of Help Keeping a
  Business Open
Economic Injury Disaster Loans (EIDL). Administered
 by SBA.
NC Rapid Recovery Loans offer bridge loan financing
 up to $50,000 with 0% interest and no payments for 6
 months, then 48 months at 5.5%
One Buncombe Fund provides loans of up to $10,000
 to meet immediate expenses with 4% interest and no
 payments for 6 months, then 36 months at 5.5%
  Apply for last two at Mountain BizWorks

Economic Injury Disaster Loans (EIDL)
 Administered by US Small Business Administration (SBA)
 Small businesses under 500 employees, nonprofits, small
  agriculture coops may apply
 Application includes last 3 years sales history, sales projections,
  balance sheet, income statement, copies of tax returns
 Must show ability to repay loan, have acceptable credit score.
  Over $25,000 requires collateral
 Loan amount up to $2 million
 Interest rates 2.75% for nonprofits, 3.75% for others, 30-year term
 Must be made by December 31, 2020

EIDL Advance

Up to $10,000 advance, does not have to be repaid
Can apply for EIDL and PPP, but not for same expenses
Timeline – 2-3 weeks for approval, once signed 7 days
 to receive funds
Apply at https://covid19relief.sba.gov/

4 Additional Tools for Businesses

Carry back of net operating losses (NOLs) for 2017 & 2018
Repeals cap on excess business losses until 2021
Increases permitted interest deduction
Write off improvements to QIP interior of non-residential
 buildings immediately
Accelerates refundable AMT credit carryover

6 Tools for Individuals
 Individuals to receive a $1,200 rebate/credit
  check, with add’l $500 per child under age 17
   https://www.irs.gov/coronavirus/get-my-payment
 Penalties waived for tapping into retirement funds early
 Required Minimum Distribution (RMD) rules waived
 $300 above-the-line charitable deduction allowed, and
  increased income limitation on charitable contributions
 Exclude up to $5,250 in employer payments of student loans
  from employee’s taxable income
 Unemployment insurance increased by $600/week, plus
  contractors and self-employed eligible to file

Decide on Your Strategy

What’s the future going to look like?

Weigh pros & cons

Make hard choices

Questions?
As an essential
business, we’re open
M-F, 8:30am – 5:30pm

More Covid-19
questions? Contact
judi@clkcpa.com

or schedule a Zoom
chat by calling
828-258-2323