COVID-19 paid leave tax credits for small and midsize businesses
Small and midsize employers can claim two new refundable payroll tax credits. The paid sick leave credit and the paid family leave credit are designed to immediately and fully reimburse eligible employers for the cost of providing COVID-19 related leave to their employees. Here are some key things to know about these credits. Coverage • Employers receive 100% reimbursement for required paid leave. • Health insurance costs are also included in the credit. • Employers do not owe their share of social security tax on the paid leave and get a credit for their share of Medicare tax on the paid leave. • Self-employed individuals receive an equivalent credit. Fast funds • Reimbursement will be quick and easy. • The credit provides a dollar-for-dollar tax offset against the employer’s payroll taxes • The IRS will send any refunds owed as quickly as possible. To take immediate advantage of the paid leave credits, businesses should use funds they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can request an expedited advance from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. For details about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov. Share this tip on social media — #IRSTaxTip: COVID-19 paid leave tax credits for small and midsize businesses. https://go.usa.gov/xvGyC
The Taxpayer Bill of Rights protects all taxpayers working
with the IRS. In fact, they lay out the framework to make sure the IRS fairly
and impartially carries out tax administration.
These rights are explained on IRS.gov and in Publication 1, Your Rights As A Taxpayer. They describe
what taxpayers can expect if they need to work with the IRS on a personal tax
matter, such as:
•Filing a return
•Paying taxes
•Responding to a letter
•Going through an audit
•Appealing an IRS decision
To help taxpayers understand their rights, here they are, along with links
where people can go for more information.
Many
companies will be asking you to complete a new revised W4. While we were confused about the complexity
of the old form, we can be more confused with the simplicity of the new form.
Especially when our federal withholding goes down.
The
new form incorporates more of a strategy of filing status and dependents
against income using the new TCJA (Tax Cut and Jobs Act) tax rules. The TCJA eliminated a lot of Itemized Filing
(Schedule A) for taxpayers by raising the standard deduction.
This
change made the tax withholding calculation tables become more skewed for
employees working part-time or more than 1 job.
This is because the tables are estimating the earnings for each payroll
as the earnings for the entire year.
Generally, working a part-time or second job the hours works are not
enough to trigger federal withholding.
Because
of this, you should review your withholding early and use the IRS Tax
Withholding Estimator to determine how much withholding you should have. There
is even a new feature allowing you to even customize the refund amount you want
to receive.
If
you need help with your W4 or to have a tax planning and withholding review,
please call or email my office.
WASHINGTON
— The Internal Revenue Service has launched a new and improved Tax Withholding Estimator,
designed to help workers target the refund they want by having the right amount
of federal income tax taken out of their pay.
The Tax
Withholding Estimator, now available on IRS.gov, incorporates the changes from
the redesigned Form W-4, Employee’s
Withholding Certificate, that employees can fill
out and give to their employers this year.
The IRS
urges everyone to see if they need to adjust their withholding by using the Tax
Withholding Estimator to perform a Paycheck Checkup. If an adjustment is
needed, the Tax Withholding Estimator gives specific recommendations on how to
fill out their employer’s online Form W-4 or provides the PDF form with key
parts filled out.
To help
workers more effectively adjust their withholding, the improved Tax Withholding
Estimator features a customized refund slider that allows users to choose the
refund amount they prefer from a range of different refund amounts. The exact
refund range shown is customized based on the tax information entered by that
user.
Based on
the refund amount selected, the Tax Withholding Estimator will give the worker
specific recommendations on how to fill out their W-4. This new feature allows
users who seek either larger refunds at the end of the year or more money on
their paychecks throughout the year to have just the right amount withheld to
meet their preference.
The new
Tax Withholding Estimator also features several other enhancements, including
one allowing anyone who expects to receive a bonus to indicate whether tax will
be withheld. In addition, improvements added last summer continue to be
available, including mobile-friendly design, handling of pension income, Social
Security benefits and self-employment tax.
Starting
in 2020, income tax withholding is no longer based on an employee’s marital
status and withholding allowances, tied to the value of the personal exemption.
Instead, income tax withholding is generally based on the worker’s expected
filing status and standard deduction for the year. In addition, workers can
choose to have itemized deductions, the Child Tax Credit and other tax benefits
reflected in their withholding for the year.
It is
important for people with more than one job at a time (including families in
which both spouses work) to adjust their withholding to avoid having too little
withheld. Using the Tax Withholding Estimator is the most accurate way to do
this. As in the past, employees can also choose to have an employer withhold an
additional flat-dollar amount each pay period to cover, for example, income
they receive from the gig economy, self-employment, or other sources that is
not subject to withholding.
For more information about
the updated Tax Withholding Estimator and the redesigned 2020 Form W-4, visit
IRS.gov.
For this calendar year, the IRS has issued guidance by notice of the current year mileage rates. There are 4 primary areas where standard mileage has guidance that can (sometimes) be used:
Business Mileage: 57.5 cents/mile down from 58 cents/mile in 2019 (Refer to Note 1)
Charitable Mileage: 14 cents/mile with no change from 2019
Medical Mileage: 17 cents/mile down from 20 cents/mile in 2019
Moving Mileage: 17 cents/mile down from 20 cents/mile in 2019 (Refer to Note 2)
NOTE 1: Business mileage is rules still exist on substantiation of records – is it a written log. The deductibility for unreimbursed business mileage for employees (subject to the 2% itemized deduction floor) has been suspended from 2018 until 2026 by the TCJA (Tax Cuts & Jobs Act). However, there are some very narrow and limited exceptions to this rule. If you a small business, you can elect to reimburse for mileage at the applicable rate listed each year. It is important that you have a set policy and procedure to follow all IRS guidelines for this.
NOTE 2: Moving mileage has been suspended under the TCJA. However, there is an exception for Military personnel who move pursuant to a military order or incident to a permanent change of station.
There are additional items related to the deductibility at the standard mileage rate contained in the tax code that should be followed. There is still the option for businesses to deduct actual costs and depreciation as well as the “fleet-average valuation rules”. There are additional rules and regulations that should be considered and discussed with you tax preparer prior to make sure you are in compliance as well as maximizing your deductible vehicle expenses.
FROM THE IRS:This notice provides the optional 2020 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. This notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan. Additionally, this notice provides the maximum fair market value (FMV) of employer-provided automobiles first made available to employees for personal use in calendar year 2020 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) of the Income Tax Regulations or the vehicle cents-per-mile valuation rule in § 1.61-21(e).
For most
taxpayers, December 31 is the last day to take actions that will impact their
2019 tax return. For example, those who plan to itemize deductions should know
that charitable
contributions are deductible in the year made. Donations charged to
a credit card before the end of 2019 count for the 2019 tax year, even if the
bill isn’t paid until 2020. Checks to a charity count for 2019 if they are
mailed by the last day of the year.
Retirement Plans
Taxpayers
who are over age 70 ½ are generally required to take distributions from their
individual retirement accounts and workplace retirement plans by the end of
2019. However, a special rule allows
those who reached 70 ½ in 2019 to wait until April 1, 2020, to receive them.
Most
workplace retirement account contributions should be made by the end of the
year, but taxpayers can make 2019 IRA contributions
until April 15, 2020. For 2019, the basic limit for 401(k) contributions is
$19,000, plus another $6,000 for those who are at least age 50.
For 2019,
total contributions to all traditional and Roth IRAs cannot exceed $6,000, or
for taxpayers age 50 and older, $7,000. Taxpayers should check IRS.gov for more
information about contribution limits,
as well as cost-of-living adjustments affecting pension plans and other
retirement-related items for tax year 2019.
Some taxpayers may be
eligible for the Retirement
Savings Contributions Credit, also known as the Saver’s Credit. The
income limit is $64,000 for married couples filing jointly, $48,000 for heads
of household, and $32,000 for singles and married individuals filing separately
for 2019.
Refunds
The vast
majority of taxpayers get their refunds faster by filing electronically and
using direct deposit.
It is simple, safe and secure. This is the same electronic transfer system used
to deposit nearly 98% of all Social Security and Veterans Affairs benefits into
millions of accounts.
Just as
each tax return is unique and individual, so is each taxpayer’s refund. Here
are a few things taxpayers should keep in mind if they are waiting on their
refund but hear or see on social media that other taxpayers have already
received theirs.
Different
factors can affect the timing of a refund. Even though the IRS issues most
refunds in less than 21 days, it’s possible a particular taxpayer’s refund may
take longer. Some tax returns require additional review and take longer to
process than others. It may be necessary when a return has errors, is incomplete
or is affected by identity theft or fraud. The IRS will contact taxpayers by
mail when more information is needed to process a return.
By law,
the IRS cannot issue refunds to people claiming the Earned Income Tax Credit
(EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law
requires the IRS to hold the entire refund, including the portion not
associated with the credits. This helps ensure taxpayers receive the refund
they’re due by giving the IRS more time to detect and prevent fraud.
Taxpayers
should not count on getting a refund by a certain date, especially when
planning major purchases or paying other financial obligations.
Update address
Taxpayers
who moved during 2019 should tell the US Postal Service, employers and the IRS.
Notify the IRSby mailing IRS Form 8822, Change of Address, to the address listed on the
form’s instructions. Taxpayers who purchase health insurance through the Health Insurance
Marketplace should also notify the Marketplace when they move out of
the area covered by their current plan.
For name
changes due to marriage or divorce, notify
the Social Security Administrationso the new name will match
IRS and SSA records. Also notify the SSA if a dependent’s name changed. A
mismatch between the name shown on a tax return and SSA records often causes
refund delays.
Changes To Using Per Diem Reimbursements To Employees For Expenses
This is important for the many employees in many industries where travel
requiring Hotel, Meals & Incidental expenses to be paid for the benefit of
the employer. With the suspension of
Miscellaneous itemized deductions for unreimbursed business expenses from 2018
– 2026, an employer and the employees should get to know the rules for proper
reimbursement and documentation.
Per diem rates cover Hotel/Meals/Incidental Expense or only Meals/Incidental
Expenses. There are also special rules for transportation industry workers and
high-cost localities.
Here is the excerpt on the new Revenue Procedure 2019-48:
Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Use of a per diem substantiation method is not mandatory. Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration. Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities. The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice. Rev. Proc. 2019-48 will be in IRB: 2019-51, dated December 16, 2019.
Please check with your employer or financial advisor on the
applicability of how to properly report to avoid having any excess amounts
charged to income & subject to taxes or not be deductible for the employer.
With the new rules from the Tax Cuts and Jobs Act (TCJA) it is in the
employee’s best interest to utilize an employer reimbursement plan effectively.
Today is another “Day”, but unlike the prior days (Black Friday, Small Business Saturday, CyberMonday) which focused on buying STUFF (or selling for the commercial business)…we change our focus to generosity.
What
and When was this Created
Giving Tuesday was created in 2012 as a simple idea: a day
that encourages people to do good. Over
the past seven years, this idea has grown into a global movement that inspires
hundreds of millions of people to give, collaborate, and celebrate generosity.
In 2018 US donations on Giving Tuesday surpassed $400million from over
3.6million donations. (source https://www.givingtuesday.org)
Tax
Exemption Status
As with any day there are things to be aware of when
contributing to charities. Many people
want their donation to be “tax deductible”.
Below is an IRS Tip and tool for determining if your charity is tax
exempt.
Are
My Donations Helping
Another concern with donating to a charity is how
“efficient” your charity is, meaning how much is spent on Programs &
Services that you are donating to. 1 out of 10 charities spends less than 65%
of their donations on Programs & Services. On a positive note 7 of 10 spend
more than 75% on their Programs & Services. Many charities do not live up
to their reputations and executive compensation or other expenses are
unreasonable. This information can be
found on the public Form 990 Tax Return and there are rating organizations such
as www.charitynavigator.org.
Two of My Favorite Charitable Organizations
MidAmerica
Nazarene University & Foundation – www.mnu.edu – my alma mater where I
decided to pursue a career in accounting and become a CPA. MNU was founded in
1966 as the Pioneers when the campus in Olathe a small town south of metro
Kansas City was farmland. Since that time the University has graduated
thousands of students with their three enduring values of Pioneering Spirit,
Purposeful Lives and Passion to Serve. Donate to MNU to help with student
financial aid and support their mission of helping reduce the burden of student
debt.
KC Pet Project – www.kcpetproject.org – we are Foster Parents for this organization providing temporary shelter to “senior” dogs not doing well in the shelter. Many senior dogs get dumped at the shelter when their owners are tired of taking care of them or their medical needs during their final years. Donate to KC Pet Project with money, supplies or time (as a foster or dog walker) or ADOPT a new pet. We highly recommend seniors that are less hyper and are already potty trained!
IRS Issue Number: Tax Tip 2019-165
How taxpayers can make sure their donations
are tax deductible
It’s that time of year when taxpayers are thinking about how they want to
give back, and many taxpayers will want to donate to a charity that means
something to them. The IRS has a tool that may help them make sure their donations
are as beneficial as possible.
Tax Exempt Organization Search on IRS.gov is a tool that
allows users to search for tax-exempt charities. Taxpayers can use this tool to
determine if donations they make to an organization are tax-deductible
charitable contributions.
Here are some things to know about the TEOS tool:
It provides information about an organization’s federal tax status and filings.
It’s mobile device friendly.
Donors can use it to confirm that an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
As a small business myself, my goal is to help the small business
owner navigate through the complexities of taxes, payroll and general
accounting work. If you have a small business that I can help as a tax preparer
or with accounting as a QuickBooks Online Pro-Advisor please give me a call or
email. https://proadvisor.intuit.com/app/accountant/search?searchId=r-todd-laytham
Some of my favorite Small Businesses & Clients:
APH Marketing: Business Development, Website & Social Media management and assistance. [email protected]
Small Business Saturday is a shopping holiday
aimed at encouraging holiday shoppers to patronize small and/or local businesses.
It falls in between Black Friday and Cyber Monday,
to capitalize on one of the biggest shopping weekends of the year. This has
boosted its popularity and helped produce a long-term upward trend.
The shopping “holiday” is a great opportunity for shoppers who want to support the local small businesses that keep their towns unique — and their community members who run them. With a number of community activities dedicated to promoting and supporting Small Business Saturday, it often also serves as a way to bring the community together.
The History of Small Business Saturday
The Small Business Saturday was created by American Express in 2010 as a way to support local retailers and small ecommerce shops.
American Express hoped that Small Business
Saturday would help strengthen a sense of community by encouraging support of
small business and, subsequently, local economies.
Since 2013, individuals and organizations have
been adding their names as Neighborhood Champions. These champions
— numbering 7,500 across all 50
states by
2018 — are dedicated to rallying their communities around support of small
and local businesses.
With the convenience of big-box stores and
online marketplaces like Amazon, independent businesses can sometimes find
gaining traction during the holiday season to be a challenge.
But Small Business Saturday’s efforts to draw
attention to the benefits of shopping local are working — to drive
awareness of the importance of small business and to encourage shoppers to put
their money into community institutions.
Of the nearly 60% of U.S.
consumers who reported knowing about Small Business Saturday, 80% say they plan
to shop
at independent retailers that day.
