Payroll Tax Relief · TAX RELIEF OPTIONS FOR EMPLOYERS 2 Emergency Paid Sick Leave (EPSL) Emergency...
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PAYROLL TAX RELIEF PLAYBOOK
Transcript of Payroll Tax Relief · TAX RELIEF OPTIONS FOR EMPLOYERS 2 Emergency Paid Sick Leave (EPSL) Emergency...
PAYROLL TAX RELIEFPLAYBOOK
TAX RELIEF OPTIONS FOR EMPLOYERS
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Emergency Paid Sick
Leave (EPSL)
Emergency Family Medical Leave (EFMLA)
SBA PPP Loan
EIDL LoansCalifornia Payroll Tax Extension
Federal Payroll Tax Holiday
Employee Retention
Credit
Families First Coronavirus Response Act (FFCRA)
• EPSL • EFMLA
CARES Act
• SBA PPP Loan • Employee Retention Credit • Federal Payroll Tax Extension
TAX RELIEF OPTIONS FOR EMPLOYERS
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EXTENSIONS
California State of Emergency or Disaster
Extension to Report and Pay California payroll taxes (up to 60 days after due date)*
Federal Payroll Tax Holiday
Extension to Pay Employer Matching FICA Social Security
CREDITS
Federal Emergency Paid Sick Leave (EPSL)
Credit for 941 taxes equal to wages + employer medicare taxes + health insurance expense
Federal Emergency Family Medical Leave (EFMLA)
Credit for 941 taxes equal to wages + employer medicare taxes + health insurance expense
Federal Employee Retention Credit
Credit for 941 taxes equal to wages + health insurance expense
LOANS
Economic Injury Disaster Loan (EIDL)
Up to $10,000 in SBA loan advance to fund operations
SBA Paycheck Protection Program (PPP)
Up to $10M in SBA loans to fund operations
Credits eliminate the tax liability Extensions extend due dates for the tax liability
Loans are also available to provide funding for businesses. Loans are not designed to provide tax relief.
* Other states may also provide extensions
Who What When How WhyEmployers required to pay employees wages under EPSL and EFMLA programs
• Qualified Leave Wages under EPSL and EFMLA programs
• Qualified Healthcare Expenses
• Employer Medicare tax on Qualified Leave Wages (1.45%)
• Qualified Leave Wages paid between 4/1/2020 and 12/31/2020
• Reduce 941 tax deposits
• File Form 7200 for advance credit (if 941 taxes don’t exceed amount of credit)
Obtain reimbursement from IRS for qualified expenses paid under EPSL and EFMLA programs
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EPSL/EFMLA TAX CREDITS
Who What When How Why• Employers whose
operations were suspended due to government order
• Employers with 50% decline in gross receipts (compared to same calendar quarter in 2019)
• Wages paid to employees (excludes wages paid under EPSL/EFMLA programs and wages eligible for WOTC credits)
• 50% of qualified wages (up to $10,000 in wages per employee for 2020)
• Qualified Healthcare Expenses
Available from 3/13/2020 until 12/31/2020
• Reduce 941 tax deposits
• File Form 7200 for advance credit (if 941 taxes don’t exceed amount of credit)
• Not obtaining PPP loan with goal of debt forgiveness
• Business meets one of the two requirements
• Business continues to pay wages to employees
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EMPLOYEE RETENTION CREDIT
Who What When How WhyEmployers with employees in California
California Payroll Taxes • Personal Income
Tax (PIT) • State Disability
Insurance (SDI) • Unemployment
Insurance (SUI) • Employment
Training Tax (ETT)
Available since 3/4/2020
Delay payment of California payroll taxes until up to 60 days after tax return filing due date
• Need funds to support business
• Expect to have funds to pay these bills within 60 days after original due date
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CALIFORNIA PAYROLL TAX EXTENSION
Who What When How WhyEmployers with FICA Social Security tax liabilities
Employer FICA Social Security tax (6.2%)
Available as of March 2020
• Delay payment of Employer FICA Social Security tax accrued in 2020
• Pay 50% of 2020 tax by 12/31/2021
• Pay remaining 50% of 2020 tax by 12/31/2022
• Not obtaining PPP loan with goal of debt forgiveness
• Need funds to support business
• Expect to have funds to pay these bills in 2021/2022
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FEDERAL PAYROLL TAX HOLIDAY
• Covid-19 Sick earnings code
• Covid-19 FMLA earnings code
• Covid-19 Qualified Health Plan Expenses memo calc code
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HOW TO REPORT QUALIFIED EXPENSES IN ISOLVED (FOR CREDITS)
941 payroll tax credits will be created in iSolved. The credits will reduce other 941 taxes on the payroll, providing immediate reimbursement of funds up to the amount of total 941 taxes for the payroll. (expected to be available in iSolved by 4/13)
• The employer should first reduce its remaining federal employment tax deposits (941) for wages paid in the same quarter to zero. (expected to be available in iSolved by 4/13).
• Employer can file a Form 7200 (Advance Payment of Employer Credits Due to COVID-19) to claim an advance credit for remaining refunds for the quarter.
• The completed Form 7200 may be faxed to the IRS at 855-248-0552.
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HOW TO OBTAIN REFUNDS (FOR CREDITS)
• Instructions: https://www.irs.gov/pub/irs-pdf/i7200.pdf
• Form: https://www.irs.gov/pub/irs-pdf/f7200.pdf
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IRS FORM 7200
Include any available credits from Q1 in your forms filed in Q2
Part 1 A - Most employers will check box 1 (941)
C - Use line 2 from Q1 941 (if available), otherwise use Q4 2019 941
D - Used to determine eligibility for credits
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IRS FORM 7200Part II
1 – Employee Retention Credit (up to $5,000 per employee plus healthcare expenses)
2 – EPSL expenses (wages+healthcare+employer medicare tax on wages)
3 - EFMLA expenses (wages+healthcare+employer medicare tax on wages)
5 – Only populate if you have manually (not via iSolved) short paid/reduced tax payments
6 – Enter any amounts from previous forms 7200 filed for the current quarter (multiple 7200 forms can be filed in one quarter)
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IRS FORM 7200 - RECORDKEEPING
1. Documentation to show how the employer determined the amount of wages paid to
employees that are eligible for the credit, including records of work, telework and absences
from work.
2. Documentation to show how the employer determined the amount of qualified health plan
expenses that the employer allocated to wages.
3. Copies of any completed Forms 7200 (Advance of Employer Credits Due To COVID-19) that
the employer submitted to the IRS.
4. Copies of the completed Forms 941
• Extension programs (California, Federal) are available now, these require signed client acknowledgment form
• EPSL and EFMLA credits will be programmed in iSolved by 4/13
• IRS Form 7200 can be utilized to obtain credits
• PPP Loans should not be used with: • Federal Payroll Tax Holiday • Federal Employee Retention Credit
• Contact [email protected] if you feel you are eligible for tax credits or extensions.
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SUMMARY
