How Trucking Operations Can Take Full Advantage Of The CARES Act
Since the outbreak of the Coronavirus pandemic and the following shutdowns and quarantines, many American businesses have lost significant revenue.
To help keep the American economy from falling off a cliff, the federal government has enacted several measures designed to help keep the economy afloat, including the CARES Act and several tax extensions.
Let’s talk about the CARES Act and the Federal Tax Extensions.
CARES Act
The Coronavirus Aid Relief and Economic Security Act (CARES Act) will pump approximately $2 trillion in stimulus into the American economy.
It was just passed on March 27, 2020.
Individuals will be receiving stimulus money depending on the amount of their yearly income.
The CARES Act also provides relief to businesses including owner-operators, nonprofits, individuals, state and local governing authorities during the Coronavirus emergency.
The highlights of the CARES Act
1. Paycheck Protection Program (PPP)
Highlights: This program directs $349 billion towards business operating expenses and job retention.
About: The PPP provides a direct incentive for small businesses to cover payroll, employee salaries, and certain other expenses like rent, utilities, and mortgage payments.
Eligibility: Businesses including non-profits, sole proprietorships, the self-employed, and independent contractors with 500 or fewer employees are eligible to apply for this loan.
The SBA (U.S Small Business Administration) will forgive loans if all the employees are kept on payroll for eight weeks.
2. Economic Injury Disaster Loans (EIDL)
Highlights: This program will give up to $2 million to small businesses.
About: The EIDL program funds small businesses or private including non-profits that suffer from the economic injury due to declared disaster regardless of the physical damage to the applicant.
Eligibility: Small businesses must have suffered an economic injury and should be located in the disaster declared county or a contiguous county.
There are no upfront fees and early-payment penalties charged by the SBA.
3. Employee Retention Tax Credit
Highlights: This program provides a refundable payroll tax credit for 50 percent of qualified wages paid by employers.
About: This program provides the businesses, including nonprofits, that are affected by COVID-19 with federal tax credits for the wages paid from March 13, 2020, to December 31, 2020.
Eligibility: Employers whose business is fully or partially suspended due to the COVID-19 shut-down or who experienced a 50% reduction in gross revenue for the calendar quarter compared with the same quarter last year.
4. Deferral of Employer Payroll Tax Payments
Highlights: Allows businesses and the self-employed to defer certain payroll taxes.
About: This program enables businesses and self-employed individuals to defer the employer portion of social security tax through the end of 2020. Half of the deferred amount will be due by the end of 2021 and another half will be due by the end of 2022.
Eligibility: All businesses and non-profits are eligible to defer their payroll taxes unless they receive a loan under the SBA Paycheck Protection Program.
5. Net Operating Loss/Excess Business Loss Changes
Highlights: The CARES Act modifies the rules relating to net operating losses carrybacks.
About: Previously, net operating losses could not be carried back to prior years. However, the CARES Act permits a five-year carryback of net operating losses.
Eligibility: All the businesses that suffer a loss in 2020 as a result of the COVID-19 pandemic.
6. Business Interest Deduction
Highlights: The CARES Act increases the business interest deduction limit to 50%.
About: Previously, the business interest deduction limitation defined by the Tax Cuts and Jobs Act was 30%. This allows the businesses to calculate the limit for the taxable year beginning in 2020 based on the adjusted taxable income for the taxable year beginning in 2019.
Eligibility: All the businesses that suffer a loss in 2020 as a result of the COVID-19 pandemic.
These are just a few opportunities that your business can take advantage of.
If you still want additional information, please visit the following links or talk to your accountant for further assistance.
7. Families First Coronavirus Response Act
Highlights: FFCRA brings substantial changes to paid sick and FMLA leave for employees in 2020. Businesses can now seek reimbursement for this through tax credits.
About: Employers are now required to provide employees with up to 10 weeks of paid Family and Medical Leave. Also, they must offer paid sick leave to those who are unable to work because they were affected by COVID-19, in self-quarantine, in isolation, and/or caring for their family members.
Eligibility: Any business with fewer than 500 employees is eligible to claim tax credits using the Families First Coronavirus Response Act.
Federal Tax Extensions
The IRS has created special income tax extensions in response to the COVID-19 crisis.
Basically, this extension changes the deadline for individuals and some businesses to file and pay their income taxes from April 15 to July 15, 2020.
You do not have to be directly experiencing the effects of COVID-19 in order to use this extension.
Who is eligible for the COVID-19 tax extensions?
Anyone with an April 15, 2020 tax deadline is eligible for the extension. If you qualify, you do not have to do anything to claim this extension. Simply file and pay your taxes by July 15, 2020, as you normally would.
What is the new tax deadline?
The new tax deadline is July 15, 2020, but you can request even more time with Form 7004 (businesses) or Form 4868 (individuals) if you need until October 15, 2020.
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What Forms are eligible?
- Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS
- Form 1041, 1041-N, 1041-QFT
- Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF
- Form 8960
- Form 8991
Are Payroll and Excise taxes eligible?
No. Under this extension, only income taxes are covered.
Are State Tax Deadlines Also Extended?
That depends entirely on which state you live in. Each state has created it’s own standards for income taxes. Consult the list below to see what your state has decided.
- April 15 (No change) – MN & NH
- May 15 – MS
- June 1 – VA
- June 15 – CT, ID, & WA
- July 15 – AL, AR, AZ, CA, CO, DC, DE, GA, IL, IN, KS, KY, LA, MA, ME, MD, MI, MN, MO, MT, NC, ND, NE, NM, NY, OH, OK, OR, PA, SC, TN, UT, WV, & WI
- July 31 – IA
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