The IRS recently introduced two new tax credits to business owners who have been impacted by the Coronavirus pandemic. Many of our clients are small business owners who may be eligible for these tax credits so we thought we'd share the quick version of what these tax credits may mean for you.
The tax credits fall into two categories:
1. Paid Sick and Family Leave
This includes a tax credit for:
The amount you are able to deduct depends on which situation above applies to your business.
Eligible employers can reduce federal employment tax deposits in anticipation of the credit. You are also able to request an advance of the paid sick and family leave credits for any amounts not covered by the reduction in deposits.
You can request the advance of paid sick and family leave by filling out and submitting IRS form 7200 found here. The advanced payments will be issued by paper check to employers.
If you believe your business may be eligible, read the full details from the IRS here.
2. Employee Retention
This is a tax credit for employers who continue to pay their employees despite a government mandated partial or complete suspension of operations, or whose business has seen a significant decline in gross receipts compared to 2019. The tax credit also includes some health plan expenses paid by employers.
For full details on what businesses are eligible for this tax credit and what wages qualify, visit this IRS Employee Retention explanation page.
Advances are also available for this tax credit. To apply, fill out and submit IRS Form 7200.
If you believe your business may be eligible for either of these credits, refer to the full details on the IRS website here or contact your accountant.
These are challenging times for many businesses and we know many of you are busy with SBA loan applications and shifting processes to accommodate new ways of doing business. If you need any supporting documentation for your SBA loan applications, we're happy to help. Learn more about which documents you may need here and feel free to contact us any time with questions about your corporate compliance or document retrieval needs.