CRISIS MANAGEMENT FOR COVID-19 - PowerPoint Presentation

1. CRISIS MANAGEMENT FOR COVID-19Phase 20 (Week 23): Updated Guidance, Legal Changes, and LegislationPresented by:Hanna Resource Group andMorris & Morris, PSC

2. James M. Morris, Esq.Juris Doctor, MPAMorris & Morris, P.S.CINTRODUCTIONSLyle S. Hanna SPHR, SHRM-SCPPresident and CEOHanna Resource GroupAllison Pettrey SHRM-CP, PHRManager HR OutsourcingHRGAutumn MorrisSHRM-CPHR Assessments and Analytics - ConsultantHRGChase Adams​M.S. SHRM-CPMgr Organizational Development​HRGSusan ElkingtonPresident, Toyota Manufacturing, Inc

3. WHAT WE’LL COVER1Executive Orders, PPP, and Updates23Legal Q&AReturning Employees to Work Safely

4. What Companies Are Actually DoingWe'd love to share with you what creative solutions companies have created to deal with COVID-19 challenges, so we encourage you to share your photos and we'll highlight them each week!Send your photos to: andreat@hannaresource.com

5. 1Returning Employees to Work SafelySusan ElkingtonPresidentToyota Manufacturing Kentucky, Inc.

6. Questions & Answers

7. 2Executive Orders, PPP, and Q&AJames M. Morris, Esq.Juris Doctor, MPAMorris & Morris, P.S.C

8. 21. Federal Unemployment Continuation: $400 weekly Federal Unemployment Aid. Required 25% ($100) to be paid by the states. Certain states, including Kentucky, indicated incapability to do so – which led to a modification indicating $300 Federal as long as employee receives at least $100Could omit self-employed, Independent Contractor, Part-Time employees, and othersAdditional guidance may be forthcoming; none now; no PUA or Federal UI inclusion2. Payroll Tax Holiday: Deferred SSI and Medicare Tax from 9/1/2020 through 12/31/2020Still no guidance as to whether this is “mandatory,” although suggestion is it is mandated3. Renter and Homeowner Assistance: Encourages feds to avoid eviction or foreclosure4. Extension of Student Loan Relief: Suspends all Federal Student Loans/extends 0% interest rate thru 12/31Executive Order UpdateClarification on Presidential Executive Orders

9. 2IRS view on PPP Forgiveness are raising concerns: If you meet the criteria for loan forgiveness, will the government tax you on the free money you’re receiving? Not directly, but it has become a little more complicated….The IRS released a notice clarifying how the forgiven loan amount would be treated:“This notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the [CARES Act] and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to section 1106(i) of the CARES Act.” If the forgiven loan isn’t included in a business’s taxable income, the expenses paid for with the forgiven loan aren’t able to be included as a tax deduction. This could have a big impact on your final 2020 tax billPPP, EIDL, and PUA InfoThe Impact of PPP, EIDL, and PUA on Tax Returns is becoming a little more clear

10. 2Typically, business payroll, rent, mortgage interest, utilities, etc., are tax deductible, lowering taxable income. Without that deduction, businesses will owe more in taxes.Assuming a $100k PPP loan, used for payroll, while receiving an extra $100,000, businesses will lose the $21,000 (21% corporate rate) in tax deductions typically received. Instead of a net of $100,000, businesses end up with a net benefit of $79,000, which could be a substantial surpriseThe AICPA is challenging the IRS decision; rules are still in flux. Until then, prep for the worstEIDL Impact on Taxes:The EIDL advance is technically a grant up to $10,000. Because it’s a grant, based upon prior IRS guidance, it will probably need to be included in taxable income. However, businesses will be able to deduct any deductible expenses paid with the grant (inventory, rent, etc.)Impact of Employee Retention Credit on Taxes:Eligible for businesses with fewer than 500 employees who either suspended business due to COVID-19 due to government order or 50% decline in gross receipts when compared to previous year. Tax credits are incredibly valuable because unlike a deduction, which reduces your taxable income, tax credits reduce your tax liability on a dollar for dollar basis. So if you have a $10,000 tax liability and a $3,000 tax credit, the amount of tax you owe is now $7,000.The credit is calculated per employee and is 50% of up to $10,000 in qualified wages paid per quarter. If you qualify for the credit and paid three employees $8,000 in qualified wages during a quarter, you’d be eligible for a credit of $12,000.Because the government knows you need this money now, you won’t need to wait until the end of the year to claim the credit. It can be claimed on your quarterly form 941.How unemployment affects taxesOne thing that can sometimes take unemployment recipients by surprise is finding out that yes—unemployment benefits are considered taxable income. That means you will have to pay state and federal taxes on the amount of money you receive, though you won’t have to pay medicare or social security taxes on it.You can pay these taxes in two different ways. One option is to fill out form W-4V, and request that the taxes are automatically withheld from your unemployment benefits payments. If you don’t request to have taxes automatically withheld, you’ll need to make estimated tax payments during the year. Beware of this to avoid an unexpected tax bill.When you’re filing your 2020 tax return, you’ll need to report the income you received from unemployment compensation. You’ll get a 1099-G slip from your state labor office that details how much you received and how much, if anything, you had withheld for taxes.There is still some uncertainty when it comes to 2020 taxes and how new programs like the PPP loan forgiveness will affect them. While lawmakers consider updates, the best thing to do is to stay organized and keep good records of your expenses, so you’re able to take full advantage of deductions if they’re allowed in the future.Related resourcesHow to Calculate and Pay Estimated TaxesTax Liability: What It Is and How to Calculate ItTax Brackets for 2019This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.Friends don’t let friends do their own bookkeeping. Share this article.PPP, EIDL, and PUA InfoThe Impact of PPP, EIDL, and PUA on Tax Returns

11. 2Impact of Employee Retention Credit on Taxes:Eligible for businesses with fewer than 500 employees who either suspended business due to COVID-19 due to government order or 50% decline in gross receipts when compared to previous year. Tax credits reduce tax liability on a dollar for dollar basis. If a business has a $10,000 tax liability and a $3,000 tax credit, the amount of tax owed is $7kThe credit is calculated per employee and is 50% of up to $10,000 in qualified wages per quarter. This can be claimed on quarterly form 941Unemployment Impact on Taxes:Yes, unemployment benefits are considered taxable income, without medicare or SSI taxesKentucky allowed for an option on withholding, which could create a substantial tax hitIf employees did not request to have taxes automatically withheld, they need to make estimated tax payments during the year. Beware of this to avoid an unexpected tax bill.PPP, EIDL, and PUA InfoThe Impact of PPP, EIDL, and PUA on Tax Returns

12. 2Impact of Employee Retention Credit on Taxes:Eligible for businesses with fewer than 500 employees who either suspended business due to COVID-19 due to government order or 50% decline in gross receipts when compared to previous year. Tax credits reduce tax liability on a dollar for dollar basis. If a business has a $10,000 tax liability and a $3,000 tax credit, the amount of tax owed is $7kThe credit is calculated per employee and is 50% of up to $10,000 in qualified wages per quarter. This can be claimed on quarterly form 941Unemployment Impact on Taxes:Yes, unemployment benefits are considered taxable income, without medicare or SSI taxesKentucky allowed for an option on withholding, which could create a substantial tax hitIf employees did not request to have taxes automatically withheld, they need to make estimated tax payments during the year. Beware of this to avoid an unexpected tax bill.PPP, EIDL, and PUA InfoThe Impact of PPP, EIDL, and PUA on Tax Returns

13. Questions & Answers

14. Morris & Morris, PSCSHRM CODE:    20-MAX96HRCI:    (Strategic): 531352