The House passed the Senate’s CARES Act yesterday. The Act includes a section related to provisions and resources available during this time for taxpayers:
CREDIT AGAINST EMPLOYMENT TAXES
- Receive a credit of Qualified Wages for each quarter
- Limited to $10,000 per employee per quarter
- Qualified Employers
- Greater than 100 employees
- Would need to shut down operation
- Greater than 100 employees
- Less than 100 employees
- If you shut down operation or
- Revenue for the quarter is less than 50% of the same quarter for the prior year
- Ends when your quarterly revenue is greater than 80% of the prior year
- This is a refundable credit
- If you take the Small Business Interruption Loan shall not be eligible for this credit
- Eligible wages are wages paid after March 12- January 1, 2021
DELAY OF PAYMENT EMPLOYER PAYROLL TAXES
- Applies to the SS match and not Medicare
- Defer 50% of payroll taxes to December 31, 2021
- Defer 50% of payroll taxes to December 31, 2022
- Self employed
- Defer 25% of the payroll tax until December 31, 2021
- Defer 25% of the payroll tax until December 31, 2022
- This provision is NOT available if you take Payroll Protection loan
MODIFICATION OF NET OPERATING LOSSES
- Carryback provision has been reinstated for 2018, 2019 and 2020
- Carryback 5 years
- Losses carried forward to 2019 and 2020 will have no limitation
LIMITATION ON BUSINESS LOSSES
- It removes the limitation of net business losses of $250/500k for Single/MFJ
- Suspends this limitation 2020
- Suspends this limitation retroactively to 2018 and 2019
INTEREST LIMITATION
- Limitation of interest deduction is being increased from 30% to 50% for 2019 and 2020 of your adjusted taxable income
- You will be able to use 2019 adjusted taxable income for 2020 (this is a benefit as most companies will have a loss this year)
QUALIFIED LEASEHOLD IMPROVEMENT
- The technical correction to 2017 Tax Cuts and Jobs Act
- QIP -improvement made to the interior portion of a non-residential building any time after the building was placed in service
- Depreciation life has been reduced from 39 to 15 years
- 100% bonus depreciation is available to assets with a life of 20 years or less
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