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The US Treasury Department and the Internal Revenue Service (IRS) have announced various relief options available for taxpayers during the current uncertain economic climate. Here are some highlights and how they may apply to you.

Economic Impact Payments 

Taxpayers who meet the economic impact payment criteria will automatically receive the payment from the IRS, which is expected to begin over the next three weeks. Eligible individuals can receive an impact payment of up to $1,200, while married couples can receive up to $2,400. Parents may also be eligible to receive $500 for each qualifying child.

Eligibly Criteria:

  • Must have filed a tax return for either the 2019 or 2018 year.
  • Taxpayers with adjusted gross income of up to $75,000 for individuals and up to $150,000 for married couples filing jointly will receive the full payment
  • Taxpayers over the above income thresholds will have their payment amount reduced by $5 for each $100 above the $75,000/$150,000 limit
  • Individuals and married couples with no children are not eligible for the payment if their income exceeds $99,0000 for individuals and $198,000 for couples filing jointly

If you do not typically file a tax return, you will need to lodge a simple tax return to receive the economic impact payment. Low-income taxpayers, senior citizens, social security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax upon filing

If you are eligible for the economic impact payment, the IRS will calculate and automatically send the payment to you. The IRS will use the information from your most recent return filed from either 2018 or 2019 to determine the payment amount and banking details.

If your return did not have your direct deposit information, the Treasury is currently working to develop a web-based portal for individuals to provide their banking information to the IRS online, so that you can receive your payment immediately as opposed to checks in the mail. More information on this is still to come.

 

Extension of Federal Income Tax Lodgement and Payment Dates 

The federal income tax filing due date has been automatically extended for all taxpayers from 15 April 2020 to 15 July 2020.

Taxpayers will also be able to automatically defer federal income tax payments due on 15 April 2020 to 15 July 2020, without penalties and interest, regardless of the amount owed. The deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

If you require additional time beyond the 15 July 2020 deadline, please contact us to arrange an additional extension on your behalf.

Both California and New York have extended the filing date to the 15 July 2020 to match with the Federal due dates. The other states are also offering extensions on filing deadlines and payments which can be found on each state department of revenue site.

 

Employee Retention Credit 

The Employee Retention Credit is designed to encourage employers to keep employees on payroll. It is a refundable tax credit of 50% of up to $10,000 in wages paid by an eligible employer affected by COVID-19.

There are specific circumstances around qualifying employers which determine the eligibility of your business. This link provides more information around the credit; IRS Employee Retention Credit Available for Many Businesses.

 

Small and Midsize Businesses – Paid Leave for Workers & Tax Credits 

Two new refundable payroll tax credits have been announced which is designed to immediately and fully reimburse employers for costs of providing COVID-19 related leave to employees. Eligible employers are businesses and tax-exempt organisations with fewer than 500 employers that are required to provide emergency paid sick leave and emergency paid family and medical leave pursuant the Families First Coronavirus Response Act.  Self-employed individuals can also receive an equivalent credit.

If you have had to pay sick leave due to an employee being unable to work either due to personal or care giving reasons related to COVID-19 you may be eligible for a reimbursement of up to two weeks of paid sick leave, paid sick leave credits and child care leave credits. If you believe this may apply to you, please contact us and we will help navigate you through potential options.

Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.
Existing Instalment Agreements 

The IRS has announced that taxpayers under an existing Installment Agreement with payments due between 1 April and 15 July 2020 can opt to suspend their payments. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer. The IRS will not default any Installment Agreements during this period. Please note that however, interest will continue to accrue on any unpaid balances.

 

More information on the US Stimulus packages are still to come as Congress is still considering various issues. We will be watching this space closely. In the meantime, to keep updated with the US stimulus package updates, please visit: https://www.irs.gov/coronavirus.

Please do not hesitate to call or email The Macro Group to discuss further with a team member.

 

Date published: 2 April 2020

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