We have been doing our best to keep you up-to-date on everything going on in relation to COVID-19 and its impact on businesses and taxes. As we start hearing rumblings of things starting to slowly reopen, we wanted to make sure you had the latest information with which to make decisions.
Paycheck Protection Program (PPP)
This has been exhaustively covered in the news, but in a nutshell, there was insufficient funding as well as a good deal of confusion on the part of small businesses, lenders and anyone else involved. While some businesses have received their PPP loans at this point, many did not even get applications processed before the first batch of money was already gone.
To make more funds available, the Interim Stimulus Plan, dubbed “CARES Act 3.5,” was passed. It includes $300+ billion in additional PPP funding, with $60 billion reserved for “small banks” with assets under certain thresholds. Most people think that a good deal of these new funds have already been earmarked for applicants who missed the first round of funding. However, it makes sense to complete loan applications all the same, particularly if yet another round of funding is approved.
While not true across the board, some businesses have seen more success applying with smaller banks and online options such as PayPal over larger banks. Keep in mind that there are still other options if the PPP loan doesn’t work for your business, such as payroll tax payment deferrals and/or the Employee Retention Credit.
Economic Impact Payments
Individuals/households that made less than $75k/$150k were told they would receive $1,200/$2,400 as an economic stimulus. However, nearly half of people eligible for these payments have not yet seen any money. In fact, some bank websites have been overwhelmed as millions of taxpayers repeatedly hit refresh to check their balances for these payments, and scammers have been working overtime trying to swindle people out of their personal information. (REMINDER: Never give out your personal information on the phone or email it in an insecure manner.)
If you qualify and haven’t yet received your payment, you can go to this page on the IRS website to learn more.
The Connecticut Department of Labor, like all 49 other states, was woefully unprepared to process this many unemployment applications at once, especially with the addition of self-employed individuals. From the Department’s website and Twitter feed, the DOL is trying as hard as it can to quickly and appropriately handle the deluge of claims and questions and checks/direct deposits did start arriving this week (last week of April).
A state’s ongoing ability to pay claims is a concern though. According to the Tax Foundation’s report from earlier this month, Connecticut could, at that time, pay about 10 weeks’ worth of claims without exhausting its unemployment trust fund. This is a moving target, of course, depending on new payments into the fund and claims made against it. As new claims increase, the ability to pay could be an issue.
Keep in mind that unemployment benefits are taxable, so make sure you have federal and state income tax withholding on your benefits or that you set aside enough money to pay your taxes when they come due.
Extended Tax Due Dates
We’ll close with a quick reminder that July 15th is the new due date for pretty much everything – nearly all 2019 income tax returns, as well as 1st and 2nd quarter 2020 estimated tax payments. Whatever type of income tax return you file, if the due date (including extension) falls between April 1 and July 15, the new deadline is very likely now July 15. Federal estimated tax payments otherwise due April 15 and June 15 are now both due July 15.
As always, we are happy to help answer any questions you have and help you with your specific business, individual or family situation as we can. Don’t hesitate to reach out to us for help.