Woodstock Quarterly Newsletter Update
Relief To our Valued Client:
We hope that this letter finds you safe and in good health during these unprecedented times. Rest assured, all of us at Woodstock Services Company believe that the services we provide to you are essential, and we are committed to continuing to serve you throughout this challenging time.
We want to make sure you are aware of some recent legislation that we feel may be of interest to you.
As you may know, on March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act, which provides financial relief for American workers and small businesses, and severely distressed sectors of the economy.
Included in this relief package is the Payroll Protection Program — a loan program designed to provide a direct incentive for small businesses to keep their employees on the payroll. No loan fees are charged by the government or lending banks. Qualifying small businesses are permitted to borrow up to 2.5 times monthly payroll costs subject to a $10 million-dollar cap. Importantly, loans may be forgiven if the borrower meets certain conditions, including spending at least 75% of loan proceeds on payroll costs. In addition, the loan forgiven is not included in taxable gross income. These loans are available on a first-come, first-serve basis until total funds allocated for this government program are expended.
Additionally, some taxpayers will receive a stimulus check. Those with adjusted gross income up to $75,000 for individuals and $150,000 for married couples filing joint returns will receive the full amount — $1,200 per individual and $2,400 for a married couple, plus $500 for each qualifying child. Single filers with adjusted gross income between $75,000 and $99,000 will receive smaller checks, based on a sliding scale. Married couples filing joint returns with adjusted gross income between $150,000 and $198,000 will also receive smaller checks based on a sliding scale. For each qualifying child of the taxpayer, $10,000 is added to the income limitation.
The Internal Revenue Service will calculate stimulus checks based on prior tax returns and automatically send the economic impact payment to the same banking account reflected on the tax return, or available through the Social Security Administration for those who are eligible. For eligible taxpayers who have not provided banking information, a check will be mailed. These payments are expected to begin on April 13, 2020.
The CARES stimulus package also suspended required minimum distributions (RMDs) from retirement plans and IRAs for 2020. This grants a reprieve for retirees age 70½ and older from taking distributions from their investment accounts. The bill also allows people younger than 59½ to take an early distribution, up to $100,000, from IRAs and retirement accounts, to pay for a coronavirus-related hardship, such as a job loss — penalty-free. The taxable amount withdrawn can be taken into income over three years.
The Treasury Department and the Internal Revenue Service are also providing tax filing and payment relief in response to COVID-19. The 2019 income tax filing and payment deadline for all taxpayers who file and pay their federal income taxes on April 15, 2020, has been automatically extended to July 15, 2020. This applies to all individuals, trusts, and corporations. This relief additionally includes estimated tax payments for tax year 2020 that are due on April 15, 2020. There is no dollar limitation on the amount of payments postponed. The deadline for making IRA and HSA contributions is now July 15, 2020.
Individual states are also announcing extending tax filing and payment deadlines to July 15, 2020, consistent with the federal government.
In addition, the Families First Coronavirus Response Act (FFCRA) offers a number of employer payroll tax credits for paid sick leave, paid family leave, and employee retention.
We wish you and your family the best during this challenging time. We continue to work to serve you with all of your tax needs. If you have any questions at all, please do not hesitate to contact us.
Elena Gillespie, CPA — Senior Vice President
Jeanne M. FitzGerald, CPA — Tax Manager