Our economic and social landscape has definitely been altered by COVID-19. We don’t know for how long or how permanent the changes will be, but this bug will be with us for years to come. The question for all of us to answer is how we adapt to this changed reality.
In the tax preparation world, like many other tax prep firms, I have gone virtual. While my favorite part of tax preparation is meeting with my clients, COVID-19 now dictates I limit in-person contact. After clients setup an appointment through a call with me or a visit to my website, they can either drop off an envelope with their tax paperwork (an optional practice with many firms for years), or they can scan and upload all of their paperwork through my secure portal.
With very rare exception, all meetings are now by telephone or video. Zoom video conferencing is my conferencing app of choice. Any additional or missing tax information is dropped off or scanned and uploaded to me, and all authorizing signatures are now done using DocuSign. My clients’ returns are filed electronically, and I send them a paper or electronic copy of their return. There are now a couple of extra steps in the process, but life goes on.
On the national front, our elected officials and the IRS are making a number of changes. I visited the IRS’ COVID-19 webpage (https://www.irs.gov/coronavirus) and their newsroom (https://www.irs.gov/newsroom) for information and found some handy information.
The earliest change we have seen is the extending of the filing and payment deadline from April 15, 2020, to July 15, 2020. Additionally, the IRS’ “People First Initiative” is postponing compliance actions and taking other steps to ease taxpayer burdens through July 15. Existing installment agreement payments between April 1 and July 15 are suspended. Field collection activities and automatic liens and levies are suspended for this period. Lastly, all in person meetings are suspended.
The new economic impact payments will put $1,200 into the pocket of each individual with Adjusted Gross Incomes below $75,000 and provide $2,400 to married couples with AGIs below $150,000. Parents will also receive $500 for each qualifying child. The payments are reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
The IRS will use information from taxpayers’ latest filed returns to figure the payments. The IRS also plans to open a web-based portal for taxpayers to use to provide their banking account information. Lastly, the IRS says that if you didn’t file a 2018 or 2019 return because you didn’t meet the filing requirements, file one anyway to receive the economic impact payment.
On the business front, the IRS, Treasury Department and Labor Department announced refundable payroll tax credits for COVID-19 related paid sick/family leave for companies with fewer than 500 employees. This credit will cover health insurance costs, and self-employed individuals can receive an equivalent credit. Employers will receive 100% of their employee’s pay up to $511/day or $5,110 total refundable credit per employee to reimburse them for paid leave for employees who are quarantined, experiencing COVID-19 symptoms, or seeking a diagnosis.
Employers may claim sick/family leave credit for two-thirds of their employee’s pay up to $200/day or $2,000 total for employees who are on leave to care for someone with COVID-19 or their children because their school or child-care facility is closed due to COVID-19. In addition to sick/family leave credit, employers can receive a refundable child-care leave credit for 2/3 of their employee’s pay up to $200/day, up to a $10,000 total for up to 10 weeks of child-care leave credit.
The US Small Business Administration’s COVID-19 page
(https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources) has a wealth of information about financial resources for small business owners. While reading about their 3.75% interest loans to small business owners, a friend pointed out the SBA’s Economic Injury Disaster Loan advance of up to $10,000. According to the SBA’s site (https://www.sba.gov/disaster-assistance/coronavirus-covid-19), this loan advance doesn’t have to be repaid.
Expanded unemployment insurance is now available for self-employed individuals. Washington Employment Security (https://esd.wa.gov/newsroom/covid-19) has announced new guidelines for getting expanded unemployment insurance. If you are out of work because of CV-19 or Governor Inslee’s March 23 stay home order, you are eligible to receive benefits. You can receive an additional $600/week for up to four months and you can receive unemployment benefits for up to 39 weeks. Sign up for their COVID-19 action alert updates at http://www.esd.wa.gov to get more information about their process.
COVID-19 is going to bring about a lot of changes in our social and economic lives. Some changes will be temporary, and others will be permanent. We will find a new normal. It’s just a matter of getting from here to there. Hopefully, some of these resources will help.
Paul Montague owns and operates Paul Montague Tax Preparation, LLC. He can be reached at pmontag3@gmail.com.
