In its second month, the coronavirus crisis is tightening its grip on the U.S. economy, spurring the Trump administration and Congress into taking bold actions to mitigate the damage. In just the last week, Congress has passed two critical pieces of legislation referred to as “Phase 1” and “Phase 2” of its coronavirus response. Congress is now considering a massive $1 trillion Phase 3 package to inject cash in an attempt to keep the economy from cratering.
Phase 1 was an $8.3 billion Act designed to shore up the country’s health care response capabilities, including additional funding for vaccine research and development.
Phase 2, which was passed by the House last weekend and approved by the Senate and signed by the President on Wednesday, is a $100 billion package targeting workers and families. The Families First Coronavirus Response Act provides financial relief for workers and businesses impacted by the virus and the economic fallout.
Phase 3 will be an ambitious stimulus package designed to inject cash into the economy through direct payments to individuals and financial support for small businesses. The Phase 3 stimulus package is currently being crafted in the Senate.
Tax credits help fund sick, family and medical leave
The Phase 2, Families First Coronavirus Response Act, ensures that sick, family, and medical leave payments are available for workers and families impacted by the virus. To that end, the Act provides small businesses with various refundable tax credits to help offset qualified paid sick leave and family leave wages paid by an employer.
The Act also provides eligible self-employed workers and those caring for a family member with a refundable tax credit against income taxes equal to 100 percent of a qualified sick leave equivalent. For individuals caring for a family member or for a child whose school or place of care has closed due to coronavirus, the Act provides a refundable tax credit equal to 67 percent of a qualified sick equivalent amount.
For employers, the tax credit is allowed against the employer portion of Social Security taxes (Code Sec. 3111(a)).
To cover leave costs, small businesses will be allowed to tap into cash they have on deposit with the IRS. For small businesses that don’t have a sufficient amount of cash deposited with the IRS, the Treasury will advance funds so those businesses can cover those costs.
For specific guidelines please see Journal of Accountancy article.
Questions? Concerns? You don't have to go at it alone
It’s important to note that these are temporary measures to provide targeted and immediate relief to individuals, families, and businesses impacted by the coronavirus. Our staff stands ready to answer your questions and provide any guidance you need during this difficult time.
Want to RECEIVE COVID-19 UPDATES?
Enter your email below and we'll keep you updated!
Please consider sharing this post
Recent Blog Posts
Glass Jacobson Named Top 150 CPA Firm by Accounting TodayJune 29, 2020
We are pleased to announce that Accounting Today has once again named Glass Jacobson in its 2020 list of top CPA Firms in the $100 ...Read More
Small Businesses Now Have an Easier Option for PPP Loan ForgivenessJune 29, 2020
In response to the Paycheck Protection Program Flexibility Act of 2020 (PPPFA), the U.S. Small Business Administration has revised its loan forgiveness application for PPP ...Read More
QuickBooks Cash Flow Planner is the Edge Business Owners Need Right NowJune 23, 2020
Cash flow has always been a troublesome issue for small business owners but never more than right now. As the country edges toward reopening, many ...Read More