IssuesWatch Live: Coronavirus Tax and Business Update

Presented March 27, 2020

Links to items mentioned in the broadcast

Federal tax

State tax

New Jersey issues

Federal aid packages

Other national issues

Student loans

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Questions from Viewers

Below are the questions we receive from viewers and the answers we provided. There are a few questions we're still researching; those will be added soon.

When is the governor going to sign the tax extension?
The deadline will "almost certainly" be extended - hopefully soon - to at least June 30. It's really a question of whether it will be extended to June 30 or July 15.

How is the IRS assessing the AGI for the stimulus package? 2019 if filed and if not then 2018? So if we have a client who had higher than normal AGI in 2018 we need to move them to the top of the pile to get them out quickly?Our understanding is that  the rebates will use 2019 tax returns to determine the amount - or 2018 if the taxpayer has not filed 2019 - and then the rebate will ultimately be reconciled based on 2020 income. Overpayments will not be required to be paid back.

Can you confirm that the family leave and sick leave provisions only apply to those who are employed as of 4/2? So if a worker is laid off prior to this date, the employer does not have a responsibility as it now stands. Correct?From the DOL website: The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.

What about college graduates that just started to work in 2019, they should file their 2019 return ASAP in order to be eligible for the 1200 refundable tax credit, is that correct? We don't know for sure yet what will happen if there's no 2018 or 2019 tax return, but there's a chance you might not get a stimulus check. However, even if you don't get a check now, you won't lose out on the money—you'll just have to wait until next year to get it. The way the law is written, the checks that will be sent now are actually just advanced payments of a new refundable tax credit for the 2020 tax year. So, if you don't get a stimulus payment in 2020, you can claim it next year as a refund or reduction of the tax you owe if you file a 2020 tax return by April 15, 2021.

Since formal federal extensions dont need to be filed, how does that effect contributions to PS Plans, 401Ks, etc. which generally require a valid extension to defer payments to to the due date of the return?
Those are also extended to July 15. See this IRS FAQ.

The WSJ reported that although the stimulus checks will be based upon 2018 & 2019 filings, ultimately the 2020 AGI is what will determine eligibility and amount of the credit. Those who have been underpaid, based upon their 2020 AGI, will receive a refundable tax credit when they file their 2020 returns. Those who were overpaid will not be required to pay that amount back. Please confirm or deny this.
Our understanding is that  the rebates will use 2019 tax returns to determine the amount - or 2018 if the taxpayer has not filed 2019 - and then the rebate will ultimately be reconciled based on 2020 income. Overpayments will not be required to be paid back.

Once the bill is signed will the NJCPA be offering webinars to help us to deal with the details?
Absolutely. Keep an eye on this link, new events will be added.

Will these rebates be shown as a prepayment of the 2020 refund to the taxpayer and therefore would need to be repaid?
Per a Journal of Accountancy article: The bill provides for payments to taxpayers — “recovery rebates” — which are being treated as advance refunds of a 2020 tax credit. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive.

Many business clients asking about SBA loans that may or may not turn into grants. Please provide any information on this that you can.
See this U.S. Small Business Administration info. And the New Jersey Economic Development Authority has rolled out several new grant and loan programs.

What if I have not filed my 2019 tax return yet and I would qualify for the check in 2019 but not based on my 2018 tax return?
File the 2019 return as soon as possible. You will get the check eventually, but you want it right away.

What is the relief for those who want to keep their employees on payroll but they cannot afford to pay the payroll taxes?
The CARES Act - if passed by the House and signed by the President - would delay payment of 50% of 2020 employer payroll taxes until Dec. 31, 2021, and the other 50% will be due Dec. 31, 2022. For self-employment taxes, 50% will not be due until those same dates. (Source: Journal of Accountancy)


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