Utilizing Covid-19 Credits and SBA loans

Dear Clients,

We at Westbrook & Co., PC have shifted our focus from income tax return preparation to determining the effect on our clients from the various government tax credits and loans related to Covid-19.  To date, we’ve sent out four email blasts and updated our Website resources as we’ve receiving information on the following:

Emergency Sick Leave under the Families First Coronavirus Relief Act (FFCRA)

Family Leave under the Families First Coronavirus Relief Act (FFCRA)

Employee Retention Credit under the CARES Act and

SBA Paycheck Protection Program (PPP) loan under the CARES Act.

Last week we spent the bulk of our time on generating payroll information for clients needing information to submit with the SBA PPP loan application.  If you have not yet submitted a loan application and need assistance, please feel free to reach out to us.

This week, we are concentrating on what credits to use when and how those credits are affected by the receipt of the SBA PPP loan proceeds.  For the credits under FFCRA and the CARES Act, you can use each of those credits as applicable under the rules to your organization, but you just cannot use the same payroll for more than one credit.  When you use the SBA PPP loan, you will not be eligible for any of the Employee Retention Credit.  It is possible that you may have payroll eligible for the emergency sick leave credit or family leave credit under FFCRA, but again, you cannot use the same payroll for more than one program.  We know this is complicated and we anticipate your call if you have further questions.

What about your tax returns?  We are still working on them, but thank goodness for the automatic extension to July 15 as the new laws have filled up a lot of our days.  Your due date to file and pay 2019 taxes on your individual tax return (and all income tax returns due April 15, 2020) is July 15, 2020.  If your 2019 return is not yet filed, the IRS will use your 2018 income to determine the amount of the stimulus dollars you will receive.  What if your income decreased in 2019, making you eligible for the stimulus money, but you haven’t filed yet?  You are not out of luck, you can still get the stimulus dollars with the filing of your 2020 tax return.

Again, please feel free to reach out to your contact at Westbrook & Co., PC for further guidance and/or discussion.  We’ve included a couple links below to the IRS website if you would like to read deeper into their recent guidance.

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#specific

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#specific

Westbrook CPA