"The coronavirus is a crisis affecting everyone, including businesses. The tax credits in place are incredible, and I am concerned many businesses will not be aware of how they work, and will lose out, either temporarily or all together," said Joshua Jenson, CPA of Oklahoma City.
Jenson said this really boils down to this: Know this one thing. If an employer paid an employee who was out for some reason related to the coronavirus, they have a tax credit coming.
Jenson went on to say, "the next thing to know is, the credit is an immediate reduction of how much the employer pays to the IRS for payroll taxes. So the credit has to be know before that tax is paid to get the immediate relief intended by the Relief Act."
Joshua Jenson, CPA has been practicing for over 27 years, and has grown to be know by many as JJ THE CPA. He went on to say, "then it is just, why was the employee out. There are 3 simple categories. Then based on the category, it leads to the max credit amount."
JJ express that the biggest thing to know about these credits is the amount paid to the employee is the credit. Each category has a max, but over 50% of employees don't make anywhere near the max. Jenson warned, "so don't let the max confuse you. Also the max is either a number of days or a overall dollar max. The max amounts and days, are per employee. This is where the credit really adds up."
JJ went on to explain, "The broadest category is the 3rd one, which doesn't require the employee have symptoms or COVID 19, or under quarantine. The 3rd category, pretty much all of America is under, which is a health emergency. And also what is broad is this category includes employees that are parents to kiddos under age 18 that are home because schools are closed. Right now (3/21/2020), I don't know of 1 school in session, in America. So again, I can't think of one business that would not qualify for this tax credit that is paying employees that are out."
Below is what the IRS shared about the 3 categories. b
Paid Sick Leave Credit
For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee's regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
For an employee who is caring for someone with Coronavirus, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee's regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Family & Medical with Child Care Leave Credit
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
JJ THE CPA says to all, "Get the word out so businesses across America get this tax credit, and the immediate relief it is meant to provide."
Jenson shared this website, www.COVID19taxhelp.com which has more information not only about the tax credits, but many planning tips for preparing for and dealing with this crisis. This is a free site he created as a community service to help individuals and businesses.
Joshua Jenson, CPA is a practicing CPA with 27 years of experience, having his own CPA practice for over 23 years working with thousands of individuals and businesses. JJ travels across the U.S. several months each year presenting over 25 tax seminars a year to CPAs everywhere. Joshua has also written a book, JJ THE CPA, in which is answers the top 60 questions posed to him from clients over his career, most of which don't actually have to do with taxes. He has a presence on social media where he daily shares information with the public.
JJ THE CPA can be reached at firstname.lastname@example.org