You can use high-deductible health plans (HDHPs) to pay for 2020 Novel Coronavirus (COVID-19)-related testing and treatment, without jeopardizing their status and you may continue to contribute to a health savings account (HSA).

Health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. Furthermore, as in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.

Finally, the CARES Act signed into law in late March of 2020, amended legislation to allow HDHPs to cover telehealth and other remote care services without charging a deductible.

Please note that this information relates only to HSA-eligible HDHPs. Employees and other taxpayers in any other type of health plan with specific questions about their plan and what it covers should contact their plan administrator.

Need more info? We’re just a phone call away:

San Jose: (408) 252-1800

Watsonville: (831) 726-8500

What is the deadline for filing my 2019 income taxes?
Calendar year Corporate taxpayers that normally must file by April 15 have had their due date extended automatically to July 15, 2020. Fiscal year filers still must file at the normal due date. Partnerships and S-Corporation income tax returns were due on March 15, 2020 and are currently considered late if a timely extension was not filed. The IRS has indicated they will be lenient in applying reasonable cause relief for failure to timely file extensions.

When do Corporations owe 2019 balances due? What about 2020 estimated taxes?
The IRS has also extended the deadline for making 2019 balance due payments until July 15, 2020, interest and penalty free. There are no limits on the amounts deferred to July 15, 2020. First quarter and second quarter 2020 estimated tax payments are also now deferred interest and penalty free until July 15, 2020. Third and fourth quarter payment due dates remain unchanged at September 15 and December 15, 2020 for calendar year taxpayers.

What tax relief provisions have passed to help businesses experiencing hardships due to COVID-19?
There have been many recent changes passed as part of the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES) recently passed. These include:

• Payroll tax credit for mandatory emergency sick leave and emergency family medical leave paid to eligible employees
• Employee retention credit for Employers impacted by COVID-19
• Delay of payment due date for the Employer portion of certain payroll taxes
• Temporary modification of the rules for deducting and carrying back net operating losses (NOLs)
• Temporary modification of the excess business loss rules
• Corporate Minimum Tax Credit changes
• Temporary modification of the deductibility of interest expense changes
• Technical correction for the tax treatment of Qualified Improvement Property (QIP)
• Changes to Small Business Administration (SBA) loans, eligibility, terms, and more

We are experiencing a substantial decrease in revenue due to COVID-19—what can we do to get relief as soon as possible?
You have several options available. Apply for an Economic Disaster Injury Loan (EIDL) with the SBA and requesting an advanced Emergency Economic Injury Grant for $10,000. The grant will be provided within three days of applying for the loan and does not need to be repaid if you are ultimately found ineligible for the EIDL program. Applying for both the EIDL and Paycheck Protection Program (PPP) loans may make the most sense. You can refinance any EIDL loan into a PPP loan if you are subsequently approved for the PPP loan.

You may also be eligible to defer the employer portion of payroll taxes for employees (Social Security portion) effective as of March 27, 2020 and not be required to deposit this with the federal government on your normal deposit schedule. The IRS is also expected to issue more information to obtain advanced refunds or credits for the Employee Retention Credit or credits available for mandatory emergency sick leave or emergency family medical leave. Note that many of these new relief options have overlapping provisions or exclusions that prevent “double dipping” so we strongly suggest you contact your Wheeler Accountants advisor for more information.

Can I amend my 2018 or 2019 return to get immediate relief from any of the new laws?
Some of the new provisions do permit you to amend 2018 or 2019 filings, if not already filed, to claim benefits. Please call or e-mail us to discuss.

Can I stop depositing payroll taxes now?
No. You must still deposit payroll taxes, except for the specific taxes eligible for deferral under the new CARES Act. Deferral is also not available if you receive debt forgiveness under the PPP program, however it is available if you receive an EIDL or PPP loan, but do not receive forgiveness, or it is available on amounts not forgiven.

Is there any way to claim some of the payroll tax credits sooner than when I file my quarterly payroll tax filings?
The IRS has recently released a draft of Form 7200 that you can file to request advanced payment of the credits.

What is the deadline for filing my 2019 income taxes?
The IRS has extended the deadline for filing 2019 income taxes to July 15, 2020. If you still need additional time to file after July 15, you can file for an extension of time to file that further extends the due date to October 15, 2020. The filing deadline for trust income tax returns and gift tax returns due April 15, 2020 have also been extended to July 15.

I owe money for 2019 taxes, when do I need to make a payment to the IRS?
The IRS has also extended the deadline for making 2019 balance due payments until July 15, 2020 interest and penalty free. If you are unable to pay by that date, you may need to request an installment plan with the IRS. There are no limits on the amounts deferred to July 15, 2020.

What about 2020 taxes, when are those due?
Both first quarter and second quarter 2020 estimated taxes are due July 15, 2020. Third and fourth quarter due dates are unaffected and still due September 15, 2020 and January 15, 2021. There are no limits on the amounts deferred for first quarter payments.i

When are IRA and HSA Contributions due?
These have also been deferred until July 15, 2020

Will I be eligible for a stimulus check or rebate?
It depends on your 2018, 2019 and 2020 income levels. The rebate amount is $1,200 per eligible individual ($2,400 for a married couple) and $500 for each qualifying child (Under age 17 and claimed as a dependent). Nonresident aliens or those able to be claimed as dependents by someone else (whether actually claimed or not) are not eligible. You will receive a rebate if your AGI is under $75,000 for a single filer, $150,000 for a joint filer, or $112,500 for head of household. The credit phases out by 5% o AGI over the previous figures, completely phasing out at $99,000 for single filers and $198,000 for joint filers. Head of household phaseout is at $136,500 for a filer with one qualifying child.

Should I file my 2019 return now, or wait?
This depends on your 2018, 2019 and expected 2020 income levels. The stimulus check is either a pure stimulus based on qualifying 2018 or 2019 income or an advanced credit against expected 2020 income. If you are ineligible based on 2018 or 2019 income, you may get the credit if you are eligible with 2020 income. You will not be required to repay or recapture the credit if you receive an advance payment based on 2018 or 2019 income but do not qualify for 2020.

2018 Eligibility	2019 Eligibility	2020 Eligibility	Recommended Action
✓	✓	✓	File ’19 Now
✓	✓	X	File ’19 Now – No Repayment Required
✓	X	✓	Don’t File ’19 Now
✓	X	X	Don’t File ’19 Now – No Repayment Required
X	✓	✓	File ’19 Now
X	✓	X	File ’19 Now – No Repayment Required
X	X	✓	Will be eligible on 2020 filing
X	X	X	Will not be eligible

What are some of the other new tax laws passed that may impact me?
A few new rules related to retirement accounts have been passed as a result of the CARES Act being passed:

• You may take a distribution of up to $100,000 from an IRA and a qualified retirement plan (if your company allows it) penalty-free for COVID-19 related reasons
• No Required Minimum Distributions (RMDs) are required for 2020
• For taxpayers not itemizing deductions you may claim an “above the line deduction” up to $300 of cash charitable donations starting with the 2020 tax year

I have an inherited IRA. Do I also get to waive my 2020 RMD Requirement?
Yes – the waiver applies to all taxpayers who are required to take a 2020 RMD

I already took my 2020 RMD, can I put the money back in?
You may be eligible for the 60 day rollover period. Consult with your Wheeler Accountants advisor

What happens if I decide to withdraw money from my qualified retirement plan for COVID related reasons?
A few things will happen. You will not be subject to a penalty, even if you are under age 59 ½. You may pay the distribution back within 3 years of the date of distribution. Income is recognized on the distribution either all up front in 2020 when you take the distribution, or ratably over a three year period. The details are complex and we suggest you contact your Wheeler Accountants advisor immediately.

What are some other items I should be aware of?
Governor Newsom announced a major financial relief package with several of the states largest lenders participating. You may call your financial institution and request a forbearance on your mortgage payments for up to 90 days with no impact to your credit score. We have heard lenders are stating the full forbearance amount is due after 90 days. You can find more information about the relief package on the California website. Contact your lender for details.

Families First Coronavirus Response Act (FFCRA) and CA State Unemployment and Disability Benefits

Am I required to pay emergency sick leave or emergency family medical leave to my employees?
You are require to pay employees emergency sick leave or emergency family medical leave if they are unable to work or telework and the employee is:

• Diagnosed with COVID-19 and subject to a federal, state or local quarantine or isolation order related to COVID19
• Has been advised by a health care provider to self-quarantine related to COVID-19
• Is experiencing COVID-19 symptoms and is seeking a medical diagnosis
• Is caring for an individual described above
• Is caring for a child whose school or place of care is closed due to COVID-19 related reasons

Are there any exemptions?
If you have fewer than 50 employees, you may request an exemption. The Department of Labor (DOL) is set to issue regulations but none have been issued as of the date of the drafting of this FAQ. The DOL advises you to document why your business with fewer than 50 employees meets the criteria set forth by the department.

Do I have to pay for all of the emergency sick leave and emergency family medical leave?
The first two weeks (10 days) of emergency family medical leave may be unpaid. Emergency sick leave must be paid. You cannot require an employee to use PTO in lieu of sick leave.

How much do I have to pay my employees?
The rate of pay for emergency sick leave or emergency family medical leave for an individual who is directly diagnosed, quarantined or experiencing symptoms related to COVID-19 or advised by a health care provider to self-quarantine is the lesser of the employees regular rate of pay or $511/day up to a maximum of $5,110.

For an employee that is caring for a person described above or caring for a child whose school or place of care is closed for COVID-19 related reasons the rate of pay is the lesser of 2/3 of the employee’s normal rate of pay or $200/day up to $2,000 total for sick leave or $10,000 total for emergency family medical leave. The combined total is $12,000.

We are subject to a local “shelter in place” order. Do we have to pay emergency sick leave or emergency family medical leave to our workers?
Not necessarily. A shelter in place order is not the same as being subject to quarantine or self-isolation orders. However, if your employee is caring for a child whose school or place of care is closed for COVID-19 related reasons, and they are unable to work or telework, you may be required to pay emergency sick leave or emergency family medical leave.

What does “unable to work or telework” mean?
An employee is unable to work if you have work for your employee and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents them from being able to perform that work, either under normal circumstances at their normal worksite or by means of telework

What if my employee can perform some functions remotely, but not all of them and is not working a full schedule?
If your employee is unable to telework their normal schedule of hours due to one of the qualifying reasons in the Emergency Paid Sick Leave Act, you and your employee may agree that they may take paid sick leave intermittently while teleworking. Similarly, if your employee is prevented from teleworking their normal schedule of hours because they need to care for their child whose school or place of care is closed or child care provider is unavailable because of COVID-19 related reasons, you and your employee may agree that they can take expanded family medical leave intermittently while teleworking. Your employee may take intermittent leave in any increment, provided that you and your employee agree. For example, if you agree on a 90-minute increment, your employee could telework from 1:00 PM to 2:30 PM, take leave from 2:30 PM to 4:00 PM, and then return to teleworking.

What relief options are available to me as an employer?
If you are required to pay emergency sick leave or emergency family medical leave you may claim a refundable tax credit on your quarterly payroll tax filling up to 100% of the amount of emergency sick leave or emergency family medical leave paid

When must I start paying benefits by?
These rules go into effect April 1, 2020 and end December 31, 2020.

I am self-employed, what about me!?
If you are self-employed, you will be entitled to an equivalent credit against self-employment tax up to a total of $5,110 of emergency sick leave and $10,00 of emergency family medical leave for a combined total of $12,000. The amount of credit is the lesser of the $511/day or $200/day limit, depending on which reason you qualify for, or your average daily self-employment income which is your neat earnings from self-employment during the year divided by 260.

This is all so confusing… what if I mess something up?
First, contact your Wheeler Accountants advisor to discuss your options. We will walk you through your options, though keep in mind some of the items in the FFCRA relate to Employment Law and you may need to consult an employment attorney as well. Additionally the DOL has a “non enforcement period” for 30 days for good faith efforts made to comply with the law.

Where can I find more information?
The DOL has an FAQ posted on their website with lots of useful information.

Are you still open?
Yes, we are still open and doing business, but not accepting in person appointments. All but a few essential staff are working remotely.

Did the IRS extend the deadline for 2019 taxes?
Yes. On March 20, the IRS extended its filing and payment deadline to July 15.

What about 2020 estimated taxes?
Q1 2020 estimated taxes are now due on July 15, 2020.

Q2 2020 estimated taxes are still due on June 15, 2020.

What is the guidance on CA taxes?
California has extended the deadline to file and pay until July 15, 2020 for both 2019 taxes and Q1 and Q2 2020 estimated taxes.

What is the IRA and HSA contribution cutoff?
The IRA and HSA contribution deadline has been postponed to July 15, 2020.

FOR ALL APPLICATIONS, EXCLUDING NON-PROFIT ORGANIZATION, THE FOLLOWING ITEMS MUST BE SUBMITTED.

• This application (SBA Form 5), completed and signed
• Tax Information Authorization (IRS Form 4506T), completed and signed by each applicant, each principal owning 20 percent or more of the applicant business, each general partner or managing member; and, for any owner who has greater than 50 percent ownership in an affiliate business.
• Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member
• Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used)

NON-PROFIT ORGANIZATION (including Houses of Worship, Association, etc), THE FOLLOWING ITEMS MUST BE SUBMITTED:

• This application (SBA Form 5), completed and signed
• A complete copy of the organization’s most recent tax return OR a copy of the organizations’s IRS tax-exempt certification and complete copies of the organization’s three most recent years’ “Statement of Activities”
• Schedule of Liabilities.
• Tax Information Authorization (IRS Form 4506-T), completed and signed for each applicant and for any affiliated entity. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management

If you need assistance in the loan application process, we are here to help. Please call 408.252.1800 (San Jose) or 831.726.8500 (Watsonville).

Dear Clients:

As news of the COVID-19 virus has engulfed headlines over the last few weeks we have been preparing for the eventuality that we suspected may come. Fortunately we moved the majority of our critical infrastructure to the Cloud a few years ago and we can confidently say that we are ready. So ready in fact, beginning March 17, 2020 we have closed our offices to all but a small crew. Though we are an “Essential Business” under Santa Clara and Santa Cruz County’s Shelter In Place directives, we are closing our doors to implement safe and sound best practices and systems to serve you to meet mandated deadlines.

We appreciate that for some, this is a big departure from how you typically interact with us, especially at this time of year. For those of you who are accustomed to coming into our offices, we ask that you work with your Wheeler Accountants team members to enroll in our Client Portal where documents can be transmitted electronically; or to make alternate arrangements if needed. We’re here to help. And we look forward to a day, hopefully sooner than later, when we can again shake hands and catch-up in person. In the meantime we are conducting tax appointments via phone or video call and look forward to advising you as always.

On March 17, 2020, the Secretary of the Treasury announced guidance that the IRS will not assess penalties or interest for individuals owing less than $1,000,000 and small businesses owing less than $10,000,000 if payments are made by July 15^th. No official guidance from the Treasury Department or IRS has been issued and it is still unclear whether this means the filing deadline is also extended. California announced last week that individuals and businesses have received an extension of time to both file and pay to June 15^th for filings and payments due between March 15^th and June 15^th, 2020. As we received more detailed information we will send out additional updates.

Thank you for placing your trust in us for all of these years. We are resilient and we know that you are too. As always, we’re here if you need us. Please don’t hesitate to let us know how we can help.

 

If you are ready to file your taxes but are missing important tax forms here’s what you should do:

 

Form W-2

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2019 earnings and withheld taxes no later than January 31, 2020 (allow several days for delivery if mailed).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.Continue reading