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The Tax Practice of IIT Chicago-Kent College of Law
The Tax Practice of IIT Chicago-Kent College of Law

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COVID-19 Updates

Posted on in Tax Rants

Hello - 

We at the Tax Practice sincerely hope you are doing as well as can be expected under the present circumstances.  To assist you with navigating through these difficult times, we wanted to provide you with the following information and updates:

Tax Changes

Deadlines Extended:  The IRS announced that all filings and taxes due on 4/15/2020 (except for estate, gift, and payroll taxes) are now due on 7/15/2020. This extension also applies to the IRA contribution period, HSA contribution period, and the grace period to make contributions to qualified retirement plans under 404(a)(6).
 
Other Deferments:  Fifty percent of the payment of the employer and self-employed payroll taxes will be deferred until December 31, 2021, for qualified employers and self-employed individuals.
 
Pre-existing Installment Plans:   For installment plans in place, no payments need to be made for due dates between April 1 and July 15, 2020. No penalty fees will be charged, but interest will continue to accrue on any unpaid balances.  If you have your installment payments automatically debited from your bank account, you need to withdraw that authorization - contact your bank. This does not impact or change estimated tax payments due for 2020.
 
State of Illinois: The state of Illinois is instituting a similar plan as the IRS for filing and payment deadlines: any filings or payments due on 4/15/2020 will now be due on 7/15/2020.  

CARES Act

Stimulus Check -- Who gets them, how much will they be, and how to receive them:
 
Adults with Social Security numbers who are U.S. residents and have an adjusted gross income (AGI) of $75,000 or less will get the full amount of $1,200. Joint filers with an AGI under $150,000 will receive $2.400. AGIs between $75,000 and $100,000 (jointly between $150,000 and $200,000) will be phased out to $0, if above the ceilings.  For every qualifying child age 16 or under, there will be an additional $500. 
 
The payment will not be garnished because of a student loan default.
 
Taxpayers who owe balances to the IRS will still be eligible for the payment (i.e., it will not be used as an offset).
Distributions will come from the IRS, which will use 2019 taxpayer returns to determine how much should be sent and to where. If no 2019 tax return has yet been filed, then the IRS will look to taxpayers’ 2018 returns.  If there is no 2018 form on file, then it will refer to your Form SSA-1099 (social security payments), if you receive one.  
 
Employee Retention Credit:  Qualified employers will be provided a refundable payroll tax credit for 50% of wages paid to employees during the crisis. The credit will be available to employers whose (1) operations were fully or partially suspended due to a COVID-19 shut-down order, or (2) if gross receipts declined by more than 50% when compared to the same quarter in the prior year.
 
For employers with less than 100 full-time employees, qualified wages are wages paid during which the operation was open or shut down, up to $10,000 per employee. 
 
For employers with more than 100 full-time employees will receive the refundable tax credit, qualified wages are wages paid to employees when the business was closed. 
 
Delay of Payment of Employer Payroll Taxes:   Employers and self-employed individuals can defer payment on their share of the 6.2% Social Security tax that would otherwise be due during 2020. One half of the deferred payment will be due on 12/31/2021 and the remaining half on 12/21/2022. 
 
Paycheck Protection Program (Small Business Loans):  This program provides that businesses with less than 500 employees, including sole proprietors and nonprofits, will have access to loans under Section 7 of the Small Businesses Act though the covered period, 2/15/2020-6/30/2020. This loan may be forgiven under the Loan Forgiveness of Paycheck Protected Loans given certain conditions.
 
We are here to answer your questions and provide assistance, including preparing tax returns.  Please contact us if you have any questions whatsoever, and do take care of yourself and your loved ones.  Better days are surely ahead.  
 
Jon and Tekla
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