MOBILE, Ala. (WALA) – Most people probably know about the federal checks that will be arriving soon to help families through the coronavirus crisis, but Congress has passed dozens of measures to help business owners and workers.
Frank Brown and Brandi Morgan, partners at the accounting firm Wilkins Miller, offered an overview Wednesday for the Mobile Area Chamber of Commerce. Here are the highlights:
Sick leave. The Families First Coronavirus Response Act, passed last month, expands guaranteed sick leave and compensates employers for the additional cost.
Those benefits kicked in April 1.
Full-time employees can get their full pay, up to $511 a day, for two weeks if they are sick with the coronavirus or have been quarantined. If an employee is caring for a family member with the virus or must be home with children because school has closed and there is no child care, he or she can get two-thirds of the regular pay, up to $200 a day.
In addition, workers who have no child care can stay home with their children under the Family and Medical Leave Act, collecting two-thirds of pay up to $200 a day for an additional 10 weeks.
People who are self-employed also can get two-thirds of their income, up to $200 a day, under this benefit.
The law allows employers to claim credits to pay all of those costs.
Paycheck protection. A provision of the Coronvirus Aid, Relief and Economic Security (CARES) Act created the Paycheck Protection Program, which is designed to encourage shut-down companies from keeping people employed even if they are not operating. Businesses with fewer than 500 employees can apply for loans to pay workers, rent, utilities and certain other expenses.
Companies get funds up to 2½ times their monthly payroll costs. The money must be paid back at 1 percent interest rate, but as long as they comply with the rules – including spending no more than 25 percent of funds on non-payroll expenses – those loans become grants. Morgan said non-profit organizations are eligible, as well.
Last Friday was the first opportunity for small businesses to apply. This Friday will be the first day for the self-employed and independent contractors to apply.
“Based on the number of businesses that have been impacted, those funds are expected to go very quickly,” Morgan said.
Senate Majority Leader Mitch McConnell (R-Ky.) this week spoke of the need for Congress to put more funds into the program from the initial $349 billion.
Businesses also can write off the loan if they rehire laid-off employees.
“The purpose of this act is ultimately to keep people on the payroll,” Morgan said.
Delayed Social Security matches. The law allows companies to delay paying the 6.2 percent employer contribution in Social Security taxes. Half of that sum must be repaid by end of 2021, and half must be paid back by the end of 2022.
“It’s essentially a zero-interest loan,” Brown said.
Relaxed rules for 401(k) accounts. The law normally requires people with 401(k) accounts to begin making withdrawals when they turn 70½ years old. That has been waived for this year, giving people who can make it without the retirement funds an option to conserve resources, Brown said.
In addition, Congress has waived the 10 percent penalty normally assessed on 401(k) withdrawals before people turn 59½. That money – up to $100,000 – will still be taxed as income, but people will have three years to pay it. That gives flexibility for people who need to tap additional sources of cash, Brown said.
Charitable contributions. Congress loosened the rules on charitable giving for 2020. Individuals can claim a tax deduction on a higher amount of giving. The cap on corporate write-offs jumps from 10 percent limit 25 percent.
Even people who do not itemize their taxes can get a deduction up to $300 for charitable donations.
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