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I am Self-Employed - What IRS Relief am I Entitled to? by Bambridge Accountants New York



26.03.2020 12:16:55 - Report by Bambridge Accountants New York on the tax relief available for self-employed individuals in the US

(live-PR.com) - The rapidly progressing coronavirus pandemic has forced the IRS to adapt its regular procedures to the needs of those affected by it.

This article is a working summary of what we know so far about the various Covid-19 reliefs' for self-employed individuals and small businesses.

THE DEFERENCE OF INCOME TAX PAYMENTS FROM APRIL 15TH - JULY 15TH
The IRS has recently announced emergency

 

legislation that will defer both income tax filing due dates and the subsequent payments. The date has been moved 90 days, from the 15th April 2020 to the 15th of July 2020. This unprecedented change in procedure has become the starting point of their aid for individuals across the United States affected by the coronavirus pandemic.

This legislation is said to be offering relief to people who owe income taxes for 2019 or estimated income taxes for the first quarter of 2020. It is worth noting that this is an automatic procedure as the IRS has stated - Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.

I AM SELF-EMPLOYED AND I HAVE LOST WORK DUE TO CORONAVIRUS. HOW CAN THIS HELP ME
The delay that will apply to to virtually all Americans will act as a bridge loan for individuals and businesses facing disruptions due to the current COVID-19 pandemic. However; you should keep in mind payment of any income tax will still be due by the 15th of July and you should manage your money accordingly.

The IRS is also urging taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days, which could provide some individuals with much needed financial respite

FAMILY FIRST CORONAVIRUS RESPONSE ACT
The Family First Coronavirus Response Act (FFCRA) is legislation that could allow self-employed individuals, that have been affected by the emergency, to claim a refundable tax credit against your income tax bill.

The paid leave an individual could be entitled to are as follows

1 - An individual could claim the equivalent of 2 weeks sick pay at 100% of their equivalent pay

2 - If it is for taking care of sick family member or child the claim would be 2 weeks sick pay at 2/3rds of their equivalent pay

The Paid Sick Leave Credit a Self-Employed Individual could be entitled too are as follows:

1 - For individuals who are unable to work due to coronavirus quarantine or self-quarantine, these people may receive a refundable sick leave credit at their regular rate, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.

2 - For individuals who are unable to work due to caring for someone with coronavirus or because a child's school or child care is unavailable due to the coronavirus pandemic, these people may receive a refundable sick leave credit regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days.

WHAT ARE TAX CREDITS AND HOW CAN THEY HELP ME
In short, tax credits reduce the overall dollar-for-dollar liability on the tax you owe. For example, if your income tax bill is $5000, and you are entitled to $2000 tax credit, your final tax bill will be $3000. These are not to be confused with Tax Deductions, which lowers the amount of income you'll need to pay taxes on.

To quote the IRS directly:

Subtract tax credits from the amount of tax you owe. There are two types of tax credits:

· A non-refundable tax credit means you get a refund only up to the amount you owe.

· A refundable tax credit means you get a refund, even if it's more than what you owe.

NON-REFUNDABLE TAX CREDITS
These are types of tax credit that serve to reduce your tax liability. For example, if your Federal tax bill came to $1500, and you had $2000 in non-refundable tax credit, the amount you owe will be reduced to zero. The excess money would not be used. Examples of this type of tax include:

· Lifetime Learning Credit

· Retirement Savings Contributions Credit

· Adoption Credit

· Elderly and Disabled Credit

REFUNDABLE TAX CREDIT
These types of tax credit serve to both reduce your tax liability and beyond. This type of credit will pay out even if an individual's liability is below zero. For example, if someone is entitled to Earned Income Credit, the individual in question can receive the credit to its full amount, regardless of liability. Examples of this type of tax include:

· Earned Income Credit

· American Opportunity Credit

· Child Tax Credit

OTHER RELIEF
The IRS has also advised that high-deductible health plans (HDHPs) can pay for Coronavirus (COVID-19)-related testing and treatment, without jeopardizing their status. This also means that an individual with an HDHP that covers these costs may continue to contribute to a health savings account.

COVID-19 SMALL BUSINESS AID
Small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act.

The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members.

WILL THINGS CHANGE?
The constantly changing political and social environment at present brings equally as much change in legislation. Although, there is not much information regarding self-employed relief at this moment, we will keep you updated on all our findings in the weeks to come.


Contact information:
Bambridge Accountants New York

442 Broadway, New York, NY 10013

Contact Person:
Alistair Bambridge
Partner
Phone: 646 956 5566
eMail: eMail

Web: http://www.bambridgeaccountants.com

Author:
Alistair Bambridge
e-mail
Web: http://bambridgeaccountants.com
Phone: 44 (0)20 3797 1432


 

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