What you need to know
The stimulus is an advance of a refundable tax credit on your 2020 taxes.
In other words, the bill created a refundable tax credit and the IRS is paying out the amount of that tax credit to eligible taxpayers now. Since the IRS does not have your 2020 tax year information, it will use a previous year’s information to calculate the amount.
This is a tax credit so it is not considered taxable income for 2020.
If the IRS gives you too much of a stimulus check, you could be asked to pay back the difference but not until you file your return on April 15, 2021. You will not be assessed interest on the over-payment amount. If the IRS pays you too little, you’ll get the difference added to your tax refund next year.
1. Priority given to those who have filed 2019 taxes.
2. If you are getting a refund for 2018, fill in your direct deposit information instead of having it mailed.
3. If you haven't filed your 2019 taxes, the check will be based off of your 2018 tax return information.
4. If you qualify based off of 2019 tax return information, but you do not qualify for 2018 and you haven't yet filed for 2019, your check will come after you file 2019 and therefore will be delayed.
5. If you qualify based off of your 2018 or 2019 tax return information, but later do not qualify based off of 2020 taxes, you'll pay it back in 2021.
6. You don't need taxable income to receive the check. For example if you receive social security, you will receive a direct deposit based off of your social security deposit information.
Small Business Financial Assistance Information
Woman Owned Grant Opportunities
On Thursday, March 26, 2020, Texas State Senator, Jane Nelson, Joined the Jane Nelson Institute for Women’s Leadership at Texas Woman’s University announcing a grant program to assist Texas, woman-owned businesses amid the COVID-19 pandemic. A total of $1,000,000 (100 grant awards, at $10,000 per grant) is available. To be eligible, applicants must be female U.S. citizens who are 18 years of age or older, Texas residents, with documentation that at least 51% of the business is woman-owned. To find out more information about the AssistHer Grant eligibility and application process, please visit TWU’s website. Applications can be submitted to: smantaro@two.edu.
Questions may be directed to Tracy Irby directly by email: tirby@twu.edu or by phone: (940) 898-2894.
Grant applications will only be accepted electronically and must not exceed 5 pages, submitted as a single PDF. Applications will be assessed for funding on a rolling basis until available funding, a total of $1 million, is expended.
Applicants are encouraged to thoroughly read the FAQ to ensure eligibility. These funds can be used to sustain your business during this time.
Please note that the grant EXCLUDES the following items:
· Payroll
· Payment of Sales and Use Tax,
· Advertising
· Charitable donations
· Penalties and fees
· Purchase of food to eat
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2020 Legislation CARES Act - Coronavirus Relief
Individual Tax Relief
- Recovery Rebates – These rebates are advance refunds or credits against your 2020 income taxes, and up to $1,200 for individuals and $2,400 for joint filers, with a $500 credit for each child. The amount of each rebate is phased out by $5 for every $100 in excess of the threshold amount. The threshold amount is based on 2018 adjusted gross income (AGI) unless you have already filed 2019. Phaseout begins at AGI of $75,000 for single filers, $112,500 for heads of households, and $150,000 for joint filers. Be aware, if a taxpayer’s AGI is more than the phase out amount on their 2020 tax return some or all of the advanced credit could be owed back upon filing of the 2020 tax return.
- Retirement Plans – The Act waives the 10% penalty on early withdrawals up to $100,000 from qualified retirement plans for coronavirus-related distributions. For purposes of the penalty waiver, see the requirements in the attached document.
- Charitable Contributions – The Act enhances tax incentives for making contributions for the 2020 tax year. It allows an above the line deduction of up to $300 for charitable contributions. This allows a deduction even if the taxpayer does not itemize. In addition, the percent of adjusted gross income limitations are increased for all taxpayers.
- Student Loans Paid by Employers – The Act provides for an exclusion of up to $5,250 from income for payments toward an employee’s education loans.
Business Tax Relief
- Employee Retention Credit – The Act grants eligible employers a credit against employment taxes equal to 50% of qualified wages paid to employees who are not working due to the employer’s full or partial cessation of business or a significant decline in gross receipts. The credit is available to be claimed on a quarterly basis, but the amount of wages, including health benefits, for which the credit can be claimed is limited to $10,000 in aggregate per employee for all quarters.
- Payroll Tax Deferral – The Act defers the payment of payroll taxes. This deferral includes the 6.2% Social Security employer’s portion and 50% of the equivalent payroll taxes incurred by self-employed persons. Half of the deferred payroll taxes are due on December 31, 2021 with the remainder due on December 31, 2022.
- Net Operating Losses – The Act allows for a five-year carryback of net operating losses (NOL’s) arising in 2018, 2019, or 2020 by a business. Businesses will be able to amend or modify tax returns for tax years dating back to 2013 in order to take advantage of the carryback.
- Limitation on Business Interest – The Act temporarily increases the amount of interest expense businesses can deduct on their tax returns, by increasing the 30 percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.
- Paycheck Protection Program – Qualifying small business concerns are eligible for Federal guaranteed emergency “Paycheck Protection Program” interest bearing non-recourse loans for business interruption because of COVID-19. These loans are eligible for forgiveness, but with any unforgiven portion repayable after 10 years with an option for deferral. (See attached Summary). There may be loan forgiveness on the PPP loan total provided borrower demonstrates that loan proceeds were used for eligible purposes, including payroll/benefits (excluding employee compensation over $100K), mortgage interest, rent, utilities.
IRS Relief
Treasury Department and the Internal Revenue Service announced on March 22, 2020 that the Federal Income tax filing due date is automatically extended from April 15, 2020 to July 15, 2020. Taxpayers can also defer federal income tax payments due on April 15, 2020 to July 15, 2020 without penalties or interest, regardless of the amount owed. This deferment applies to all taxpayers, individual, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
NOTICE Estimated tax payments due on June 15, 2020 have not been extended. Only the April 15th estimated tax payment has been extended to July 15, 2020.
State income tax deadlines vary by State. We will be keeping up to date on these deadlines and will discuss with each of you as it applies to you.