Archive for News

WHAT YOU NEED TO KNOW ABOUT THE CARES ACT

On Friday March 27th, 2020 Congress passed a $2 trillion stimulus bill to address the economic crisis caused by the coronavirus pandemic.

The first part of this Act is direct stimulus payments to many taxpayers.  Individuals are eligible for up to $1,200 and couples would receive up to $2,400.  In additional you will receive $500 per child.

But not everyone will receive these stimulus payments. There are phase-out based on Adjusted Gross Income:

Single taxpayer phase out starts at $75,000 of adjusted gross income and reduced by $5 for every additional $100 of adjusted gross income.  Those making more than $99,000 will not receive anything. 

Married taxpayers phase out starts at $150,000 of adjusted gross income and reduced by $5 for every additional $100 of adjusted gross income.  Those couple making more than $198,000 will not receive anything.

Below are the charts giving in $5,000-$10,000 increments. There are also several websites that have an actual calculator. 

Stimulus Checks (Single)
AGI Payment
$75,000 $1,200
$80,000 $950
$85,000 $700
$90,000 $450
$95,000 $200
$99,000+ $0
Stimulus Checks (Married)
AGI Payment
$150,000 $2,400
$160,000 $1,900
$170,000 $1,400
$180,000 $900
$190,000 $400

 

How do I receive the stimulus payment?

If you have already filed your 2019 income tax returns, the IRS will base the adjusted gross income off of 2019.  If not, do not worry; they will base off your 2018 tax return adjusted gross income.

The payments will be made between now and December 31, 2020.  If you have provided direct deposit information on your return, it will be direct deposited.

As you prepare your 2020 tax return, you will have to recalculate the amount you were actually owed based on 2020 tax data.  If the advanced payment was less than what you are owed in 2020 the excess will be treated as a credit on 2020 tax return.  In reverse if your 2020 adjusted gross income is greater than 2018 or 2019, you will have to add the amount to your 2020 tax liability. 

 UNEMPLOYMENT BENEFITS

  • The CARES ACT adds $600 per week from the federal government on top of whatever base amount a worker receives from the state. This boost will last 4 months.
  • Added 13 weeks of unemployment insurance. Those nearing the maximum number of weeks allowed by their state will receive an extension.  New filers would also be allowed the collect for a longer period of time.
  • Self-employed individuals, freelancers and independent contractors are included through the end of this year.

STUDENT LOANS

  • Employers can provide up to $5,250 in tax-free student loan repayment benefits
  • All loan and interest payments are deferred through September 30th, 2020 without penalty on all federally owned student loans.

SMALL BUSINESS LOANS

The CARE Act included $350 billion in loans for companies with 500 employees or fewer.  This includes non-profit, self-employed people as well as hotel and restaurant chains with up to 500 workers per location.

Cash Assistance:

These are loans to cover payroll, rent, and other expenses.  That can be a forgivable loan if you meet the criteria. 

The covered period is February 15, 2020 through June 30, 2020.  These “paycheck protection loans” are limited to the LESSER of:

Sum of the average monthly “payroll costs” for 1 year period ending on the date the loan was made or 10 million.  “Payroll costs” include:

  • Wages, commissions, salary, or similar compensation to an employee or independent contractor
  • Payment of a cash tip or equivalent
  • Allowance for dismissal or separation
  • Payment for group health care benefits (includes premiums)
  • Payment of any retirement benefits
  • Payment of state or local tax assessed on the compensation of employees

 Payroll costs DO NOT include:

  • Payroll taxes
  • Compensation for employees whose principal residence is outside the U.S.
  • Qualified sick-leave or family medical leave for which a credit is allowed

These loans will have a maximum maturity of 10 years and the rate of interest will not exceed 4%.  Proceeds may be used to cover payroll, mortgage payments, rent, utilities, and other debt service requirements.  The standard fees imposed under Section 7 of the Small Business Act are waived.  There is NO personal guarantee required by the business owner.

 LOAN FORGIVENESS OF PAYCHECK PROTECTION LOANS

In a separate section of the CARES Act, a portion of the “paycheck protection loans” are to be forgiven on a tax-free basis if you meet the criteria.

The amount to be forgiven is the sum of the following payments made by the borrower during the 8-week period beginning on the date of the loan:

  • Payroll costs (which we defined above)
  • Mortgage interest
  • Rent
  • Certain utility payments

There may be a reduction in the amount that is forgiven due to reducing the workforce during the 8-week period when compared to either 2019 or 2020; or reduction in salary or wages paid to an employee who has earned less than $100k in annual salary by more than 25% during that covered period.

The small business can avoid this reduction if they rehire or increase the employee’s pay within the allotted time period.

EMERGENCY GOVERNMENT DISASTER LOAN AND GRANT

The Act expanded access to Economic Injury Disaster Loans under Section 7(b)(2) of the Small Business Act.  This program provides small businesses with working capital of up to $2 million to help overcome the temporary loss of revenue they are experiencing.  This is administered through the S.B.A. (U.S. Small Business Administration).

This loan does not include payroll costs.

 EMPLOYEE RETENTION CREDIT

The operation of the business was fully or partially suspended during any quarter during 2020 due to order from an appropriate government authority resulting from COVID-19, or

The business remained open, but during any quarter in 2020, gross receipts for that quarter were less than 50% of what they were for the same quarter in 2019.  The business will be entitled to a credit for each quarter, until the business has a quarter where it’s recovered.  The receipts exceed 80% of what there were for the same quarter in the prior year.

The refundable credit is applicable for all wages paid between March 12th, 2020 and before January 1, 2021.  The credit will be computed on a quarterly basis and equals 50% of qualified wages including health benefits, up to $10,000 paid to each employee ($5,000 in actual credit). 

NOTE: If the employer takes out a “payroll projection loan” no employee retention credit will be available.

DELAY OF PAYMENT OF EMPLOYER PAYROLL TAX AND SELF-EMPLOYMENT TAX

For the period March 27, 2020 and ending before January 1, 2021, an employer may elect to defer the payment of the employer portion of Social Security-6.2%.

Similarly, a self-employed taxpayer can defer paying 50% of their social security as well.

The amount deferred is to be paid back as follows:

  • 50% on December 31, 2021
  • 50% on December 31, 2022

NOTE:  Employers and self-employed individuals cannot use this delay of payment if they have taken out a “payroll protection loan”.

 USE OF RETIREMENT FUNDS

A taxpayer is allowed to take a “coronavirus related distribution” of up to $100,000 in the year 2020 and there will be no penalty.

The definition of “coronavirus related distribution”:

  • Individual who is diagnosed with SRS-COV-2 or COVID-10 by an approved test through the CDC
  • Spouse or dependent is diagnosed with one of the 2 diseases
  • Individual or family who experience adverse financial consequences as a result of being quarantined, furloughed, or paid off. It also includes having your work hours reduced, or being unable to work due to lack of child care.

The income tax due on this distribution can be spread over a 3-year period beginning with 2020.  The taxpayer can also choose to pay back the distribution over the 3 year period and avoid any tax consequences.

CHARITABLE CONTRIBUTIONS

The CARES Act allows an individual to make a cash contribution of up to $300 and deduct the contribution “above the line” in computing their adjusted gross income.  Thus, if a taxpayer does not itemize, they are able to deduct up to $300 above the line.

 The CARES Act has many components to assist business owners.  Please contact our office if you are needing to determine which fits your business the best.  My staff and I are here to help!

On a personal note it is wonderful to see your posts on Facebook and Instagram.  Parents and children spending quality time together.   Sometimes we get lost in all the hustle and bustle.  This pandemic has provided a time to step back and appreciate what we have.

We will get through this together!

script-fonts

Installment Agreements Suspended

Earlier today, IRS rolled out additional information on its operations, entitled the People First Initiative. While the document is fairly dense, here is what we see as the most salient features for enrolled agents:

  • Installment agreements: Payments due between April 1 and July 15 for taxpayers under existing installment agreements are suspended. Taxpayers may enter into new installment agreements.
  • Offers in Compromise (OIC)
    • Pending OIC applications will have until July 15 to provide additional supporting information.
    • Payments on accepted OICs may be suspended until July 15.
    • IRS will not default an OIC for taxpayers delinquent in TY18 filing.
  • Liens and levies initiated by field revenue officers will generally be suspended and new automated liens and levies are suspended.
  • Generally, IRS will not initiate new field, office, and correspondence audits.
  • Earned income tax credit and wage verification reviews have until July 15.
  • Appeals will continue to hear appeals over the telephone or by video conferencing.
  • IRS will continue to take steps where necessary to protect all applicable statutes of limitations.

Providing peace of mind and financial security for Missouri workers and families moving forward as we combat COVID-19 is a top priority for Governor Parson. The Department of Revenue has contributed to our state’s response by easing the burden and short-term uncertainty facing our state.

Mirroring the federal guidance issued by the Internal Revenue Service (IRS), the Missouri Department of Revenue (DOR) will provide special filing and payment relief to individuals and corporations:

  • Filing deadline extended: The deadline to file income tax returns has been extended from April 15, 2020, to July 15, 2020.
  • Payment relief for individuals and corporations: Income tax payment deadlines for individual and corporate income returns with a due date of April 15, 2020, are extended until July 15, 2020. This payment relief applies to all individual income tax returns, income tax returns filed by C Corporations, and income tax returns filed by trusts or estates. The Department of Revenue will automatically provide this relief, so filers do not need to take any additional steps to qualify.
  • This relief for individuals and corporations will also include estimated tax payments for tax year 2020 that are due on April 15, 2020.
  • Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. Individuals and corporations that file their return or request an extension of time to file by July 15, 2020, will automatically avoid interest and penalties on the tax paid by July 15.

To alleviate public congestion in local license offices, DOR has implemented automatic extensions for expiring driver licenses and motor vehicle registrations. These extensions are effective immediately:

  • Vehicle owners with registrations or license plates expiring in March and April have been granted an automatic two-month extension. Owners will be able to continue operating their vehicles on Missouri roadways without penalty until they can apply for renewal.
  • The time frame in which a vehicle safety and emission inspection is valid for March and April license plate expirations has also been extended an additional 60 days. Applicants for title will not be assessed a late title penalty when visiting a license office, effective immediately; this waiver will continue through April 30, 2020.

Valid Missouri driver licenses, nondriver licenses and noncommercial instruction permits with original expiration dates of March 1, 2020, through April 30, 2020, have been granted an automatic 60-day extension:

The approved extension does not waive the mandatory retesting requirement for persons who have allowed their license to expire for more than 184 days. Also, individuals who were provided notice to complete additional testing as part of a medical review program requirement may be granted an additional 60 days to comply with such requirements.

Wamhoff Accounting Services Reduced Hours Notice

Wamhoff Accounting Services is committed to keeping our employees and clients healthy and safe.

Effective Monday March 23rd we are working reduced hours:

M-F 9 am to 5 pm

Closed Saturday March 28th

Saturday April 4th and 11th 8 am to 4 pm

If you are unable to gather and send in your tax information, please let us know and we can contact you after this quarantine.  With both Federal and Missouri extending the due date of the tax return as well as any balances due and first quarter estimated tax payments, you can assure no late penalties or interest.

Stay healthy and be safe.

Sandy Furuya, President

Wamhoff Accounting Services

 

On March 17th, 2020 the Treasury Secretary, Mnuchin announced that tax returns are still due by April 15th, 2020.  However payments due on that day may be delayed until July 15, 2020 without occurring penalty or interest. 

The only way to delay payment is to file the return by April 15th, 2020 or file an extension.

According to the IRS they will continue to process returns and issue refunds that are due to taxpayers.

At this time we are not taking tax appointments.  We will review your tax returns through a telephone conference.  Our goal is to keep our clients as well as our employees’ and families safe at this time.

We appreciate your understanding during this difficult time. 

Wamhoff Accounting Services will keep you up to date on any updates or changes.

 

Sandy

The Wamhoff Workplace: Coronavirus Tax-Season Precautions

Good afternoon. Like many of you, we at Wamhoff Accounting are closely following the news and developments regarding the Coronavirus. We understand the collective concerns of clients, employees, and the community and are taking serious precautions to help create a clean and safe environment. These include:

  • Encouraging team members and clients to stay home in the case of illness
  • Wiping down all door handles and surfaces after all meetings—client and internal
  • Using disposable towels and wipes, and not touching the surface of the towel used
  • Washing our hands after handling files and paperwork as often as possible
  • Sanitizing our work areas, including computers, phones, calculators, printers, copiers and fax machines after every use

We do understand that you may feel some hesitation about keeping scheduled, in-person appointments. There are several options we offer if you prefer an alternative to visiting the office, including:

  • Mail In’s- a return signature is required upon completion of the return. Wamhoff will provide you with a postmarked envelope and send it via priority mail to you.
  • E-Mail- documents will be transmitted through our secure email server, and an e-signature is required upon completion of the return.
  • Portal Upload- we may exchange documents via our secure, Net Client CS Portal.

In some cases, either you or the Wamhoff team may need to clarify details, obtain final numbers for your returns, or perform a review of your returns. If you prefer, these conversations may take place via phone, or whichever route is most comfortable for you.

The Wamhoff team takes your health and safety very seriously and are committed to providing you with a convenient tax filing experience with the exceptional service you’ve come to expect. We thank you for your support and are here to answer any questions you may have or explore which option may be best for your situation.

Sincerely,

Sandy

Employee Appreciation Day

script-fonts