To our Valued MHA Clients and Friends:
We miss seeing your faces and wanted to let you know that we are doing well here at MHA. Most of the team is working remotely from home while a few of us (less than 10) are covering the office to answer phones, gather mail, scan tax documents and process completed projects. This may change next week so please continue to use email as your best source to reach our team.
We have a couple of updates for you this morning:
The US Treasury secretary, Steven Mnuchin, reported today that Americans will have an additional three months to file their taxes amid the coronavirus pandemic . “W e are moving Tax Day from April 15 to July 15,” Secretary Steven Mnuchin tweeted . “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” He said he was acting at President Donald Trump’s direction. The White House had announced previously they were deferring tax payments for 90 days, but that Americans would still need to file by April 15. Now, the deadline will be extended into the summer. Mnuchin said Americans with refunds should still file now.
At MHA, we plan to continue to process the tax returns while prioritizing tax returns that are for people due refunds. If you owe tax, it is best to wait and file in the summer. This new extension allows us time, however, if the Firm is asked to close for a few weeks. We can and will continue to work remotely but the process is slower.
The second update for you is regarding the tax bill that was signed into law earlier this week. That bill guarantees free testing or health care coverage for coronavirus testing. It also provides paid sick leave for some workers and offers additional funding for seniors, food assistance, and unemployment benefits. It excludes employers with more than 500 employees. It does not specifically exclude employers with less than 50 employees, but it eliminates the risk of penalty if the employer does not offer sick leave.
The bill was originally intended to also provide for a short-term payroll tax reduction but that did not make it into the final legislation. There is a very complicated refundable tax credit equal to 100% of qualified paid sick or family leave wages paid by an employer for each calendar quarter. The 100% is a bit misleading because there are daily limitations. The tax credit is allowed against the employer portion of Social Security taxes so you would still pay the employee their normal rate but then you can reduce your employer payroll tax cost by the amount of qualified wage paid. Be sure to let our team know if you are paying your employees to stay home and not work due to exposure or symptoms; to care for an at-risk family member; or to care for a child due to school closure and track those hours/wages separately so that we can properly calculate the tax credit for you.
For our small business clients who are temporarily closed and need to cut back on costs, please be sure to reach out to your service provider to discuss options. We may be able to skip processing payroll for the business owners until things return to normal. Stay in communication with them by email or phone so they can best help you plan for the upcoming months.
As a reminder, we have not heard about an extension of time to pay first quarter 2020 taxes, however, Secretary Treasurer Mnuchin did tweet that they have moved tax day from April 15 th to July 15 th so I think there is an argument for the 1 st quarter. If you want to be safe, I recommend going online and making a payment similar to the prior year on or before April 15 th and be sure to choose the 2020 estimated tax option. Colorado said they are following the IRS so anything passed by the US Treasury Secretary will generally apply to Colorado.
Details of the first tax bill are still unfolding and we are watching the second tax bill that is moving through congress this week. That tax bill is leaning toward paying checks to individuals based on their 2018 net income with phase outs starting around $75,000/person, however, it is in the very early stages of negotiation. We will keep you posted as we learn more about this.
Kim Hitchcock, CPA
McNurlin, Hitchcock & Associates, P.C.