Recent tax changes and highlights of the CARES Act

COVID19
01 Apr 2020

 DEADLINES 

  • IRS postponed the due date for both filing a return and for making income tax payments for individuals to July 15, 2020. 
  • Minnesota, North Dakota, and Wisconsin extended to July 15, 2020 as well. 
  • First quarter estimate for tax year 2020 is due July 15, 2020. 
  • As of now, the second quarter estimate is still due June 15, 2020. 
  • Minnesota did not change estimate due dates, first state estimate for tax year 2020 is due April 15, 2020. 
  • The deadline for making 2019 contributions to a retirement plan (IRA’s, 401(k), SEP) and/or Health Savings Account (HSA) has been extended to July 15, 2020.

BUSINESS LOSSES

  • Five year carryback of Net Operating Losses (NOL) arising in taxable years ending after December 31, 2017 and before January 1, 2021 allowed once again. 
  • Can offset 100% of taxable income (80% limitation removed thru tax years beginning before January 1, 2021). 
  • Limitation on excess business losses for taxpayers other than corporations removed for tax years beginning after December 31, 2017, and before January 1, 2021.

RETIREMENT PLANS

  • Coronavirus‐related distributions from eligible retirement plans are not subject to the 10% excise tax on early distributions. 
  • May not exceed $100,000 and taxpayers may elect to ratably spread the income over a three-year period beginning with taxable year 2020. 
  • Required minimum distribution (RMD) rules are waived for calendar year 2020.

RECOVERY PAYMENTS 

  • Taxpayers with adjusted gross income up to $75,000 ($150,000 Married Filing Joint) are eligible for a $1,200 ($2,400) payment, as well as an additional $500 per child (under age 17). 

EMPLOYER CHANGES 

  • Employers and self‐employed taxpayers can delay payment of the employer portion of certain payroll taxes through the end of 2020. The deferred amounts due in two equal installments, one at the end of 2021, and the other at the end of 2022. 
  • Eligible employers receive a refundable quarterly payroll tax credit equal to 50% of qualified wages paid to an employee. For purposes of the credit, up to $10,000 of qualified wages per employee is taken into account.  
  • To qualify, employers whose trade or business is (1) fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID‐19, or (2) who have a 50% decrease in gross receipts for the same calendar quarter in the prior year. 
  • Employers with fewer than 500 employees must provide employees with up to 80 hours of paid sick leave (for full‐time employees) and expanded paid child care leave when schools are closed or child care providers are unavailable. This allows for a credit against payroll taxes. Employers with less than 50 employees may file for an exemption from this paid leave requirement where the viability of the business is threatened.

SMALL BUSINESS ADMINISTRATION (SBA) LOANS

  • The loan and interest can be forgiven at the end of the term if used for payroll, rent, utilities, and other qualifying expenses, and the number of employees is not reduced.
  • AgCountry will be an eligible lender for this program. We have a team analyzing the provisions of this program and will be sharing more soon.

Thank you for your business! To see a summary of other items that are within the CARES Act that could impact farmers, ranchers and agribusinesses, please click here

Renee FInk
Written By: Renee Fink
VP Tax