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COVID-19 TAX BENEFITS TO HELP EMPLOYERS AND EMPLOYEES

Tuesday, April 14, 2020

          As the COVID-19 relief plan continues to unfold, information was released recently detailing the benefits to employers and employees included in the plan. Due to the main concern being employees having to take sick time either due to caring for themselves or a family member related to COVID-19, has made it difficult for many employers in terms of sick and family leave as well as employee retention. Citing these needs, the IRS has outlined several tax credits for employers with employees who potentially meet a few criteria. First, for employees.

          • Care for children due to daycare or school closure
            Paid Medical and Family leave equal to two-thirds of their regular pay up to $200 per day or a total of $10K. A maximum of ten weeks of qualifying leave time can be counted towards the family leave credit under the plan.
          • Sick and Family Leave
            Employees that are unable to work due to being quarantined, self-quarantine, due to symptoms who are seeking diagnosis are entitled to receive up to 10-days (80 hours) of paid sick leave at their regular rate of pay. If the applicable local, State or Federal minimum wage is higher, they will receive up to $511 per day but no more than $5110 total.
          • Eligible Employer Credit
            For the period of April 1, 2020, through December 31, 2020, eligible employers are entitled to a credit equal to the full amount of the required sick and family leave, in addition to health plan expenses and the employer’s share of the Medicare tax on the leave.
          • Employee Retention Credit
            Businesses with operations partially or fully suspended due to governmental COVID-19 orders or that experience significant reduction in gross receipts compared to 2019 are considered eligible to claim the employee retention credit (ERC). The ERC is a refundable tax credit equal to no more than 50 percent of up to $10,000 in qualified wages, including health plan expenses) that are paid after March 12, 2020, and before Jan. 1, 2021. 
          • The refundable credit applies against certain employment taxes on wages paid by all employees and is also capped at $5,000 per employee. Eligible employers can reduce federal employment tax deposits in anticipation of the credit. Employers can also request an advance of the employee retention credit for any amounts not covered by the deposit reduction.  

            We understand how confusing it can be to face a litany of new tax credits, deadline extensions, and coronavirus relief legislation that seem to change daily. Since these measures have been initiated, the tax professionals at Alliance Tax Solutions are committed to tracking the latest changes and assisting taxpayers with taking advantage of all applicable COVID-19 related tax benefits. If you need any tax services, please call us at (404) 592-1227 or request a consultation at alliancetaxsolutions.com.


             


             

             

             

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