COVID-19 UPDATES

New 2020 Tax Deadlines Due to COVID-19

Federal Government Tax Deadlines

The IRS has extended the tax filing deadline to July 15th.
This includes:

  • Federal Tax Payments Owed for 2019 Income tax
  • 1st Quarter Estimated Tax Payments for Self-Employed Taxpayers**

**This does NOT apply to 2nd Quarter estimates which are still due on June 15th

    No penalties or interest will accrue until July 16th, 2020

New Jersey:

NJ announced on April 1, 2020 that it will extend the due date of April 15th to July 15th to coincide with the Federal Government.

No clarification has been made on whether this includes sales tax (due April 20th) or estimated tax payments for self-employed taxpayers (due April 15th).

Coronavirus Aid, Relief, and Economic Security (CARES) Act

Information is still in the process of being updated and be made available. Here is a synopsis of what information is available now: The following information is available from the US Senate Committee on Small Business & Entreprenuership. Follow this link.

Paycheck Protection Program: 

If you are self-employed, scroll to the bottom for info on how this program applies to you.

SBA directs you to apply through lenders that are participating in the program. Most banks are waiting on guidance but encourage you to get ready:

What you need to know about the Paycheck Protection Program

  • Under this program: Eligible recipients may qualify for a loan up to $10 million determined by 8 weeks of prior average payroll plus an additional 25% of that amount.
  • Loan payments will be deferred for six months.
  • If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination.

Have the following information:

  • The date you started your business
  • Detailed information in order to calculate the average monthly payroll costs for your employees for the past 12 months, as outlined by the SBA
  • Your annual revenue (This is gross amount – not net!)
  • Your business mailing address

For Self-Employed People, the Paycheck Protection Program is still a viable option even if you don’t have payroll. Read more about it plain English here:

https://bench.co/blog/operations/paycheck-protection-program-self-employed/

Don’t let the verbiage in this article throw you…

  • You are not a Corporation if you are an LLC (Limited Liability Company)
  • If you fill out a schedule C and you are an LLC – You are a Sole Prop to the IRS (Your LLC is a state registration and the IRS considers you a ‘disregarded entity – this is why your business taxes go on your personal tax return on Schedule C. You do not have a separate business tax return.)

Do not confuse people you pay as independent contractors with employees. If you have your own business and no payroll, including no payroll for yourself – then your business has no payroll.

You only have payroll if you:

  • Are an S-Corp Shareholder
  • Are a C-Corp Shareholder
  • You actually run payroll, (i.e. Use a payroll company, submit withheld taxes for yourself and employees through Forms 941, 940 and W2. If you only issue 1099s to folks at year-end, you do not have payroll.)

If you have people that you pay (independent contractors) you should consider only including in your application the amounts you regularly pay these individuals. Part of the application process will require you to look at your Schedule C net self-employed income. You will need to look for the amounts paid to subcontractors and add this back to your net income.

For example:

If your net self-employment income (line 31) is: $XXXX

You need to look at the amounts (if any) on line 10 and line 37. This are amounts that were listed as amounts paid out in commissions and to independent contractors. (If you hadn’t paid these people, your line 31 would be higher, right?) If you plan to continue to pay these folks as independent contractors during the pandemic period for work, they are continuing to do for you (from home, etc.) then you should add these amounts back to your net income on line 31.

BUT if you are not going to pay them, don’t do this. Only the amounts you actually pay them will not be required for repayment on the loan.

Remember –

This loan is not meant to replace lost profits or sales. It’s meant to keep your existing obligation–

  • Business rent (not personal rent)
  • Business mortgages – not personal mortgages
  • Business utilities

If you use it to pay things other than these items, then you will be required to pay the loan back.

You will be requesting loan forgiveness and proving that you followed directions. It’s not automatic.

It looks at your net self-employment income (line 31 on your schedule C) divided by 12 to get a monthly amount. That monthly amount x 6 months gives you an idea of what you might get approved for.

Finally, …

You cannot get both the SBA Loan and unemployment. So, choose which one is better for you.

This is all new and somewhat overwhelming to everyone as we are figuring out the ins and out of this new legislation. As things are updated, I will update my website. If you call or email me with questions, I will do my best to help you out!

The SBA’s Economic Injury Disaster Loan Program

The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

This is the application link – you can click right here and fill it out.