Coronavirus Tax Update 3/28/2020 - BGES Group Insurance

Dear Friends and Clients:

I hope you are enjoying a restful weekend. We are trying to limit the frequency of our updates and only to information we think is important that you know. However the news keeps coming and there are developments that affect many of our clients and friends. The following deals with the CARES Act signed into law by the President yesterday.

FOR INDIVIDUALS:

1. Is the government sending you a check? All US residents who are not dependents of another are eligible for a $1,200 rebate ($2,400 for married couples). There is an additional rebate of $500 per child. The rebate phases out beginning at Adjusted Gross Income (“AGI”) of $75,000 for single taxpayers, $150,000 for married taxpayers, and $112,500 for head of household taxpayers. AGI includes all of a taxpayers income including investment income. The reduction is $5 for each $100 of adjusted gross income (AGI) over the relevant threshold. Married couples who’s AGI exceeds $198,000 and singles who’s AGI exceeds $99,000 will not receive a check. Payments will be based on 2019 tax returns if filed, or 2018 tax returns if 2019 is not filed yet. You do not have to apply to receive your check. They will be sent automatically to those eligible.

2. Withdrawals from retirement accounts. The 10% early withdrawal penalty is waived for distributions on or after 1/1/2020 for coronavirus-related purposes. The distributions are still taxed though and will be taxed over a 3-year period. The amount withdrawn can be recontributed to an eligible retirement plan during that time without regard to the contribution limits at that time.

3. Required distributions from retirement plans. With the hit to the stock market, the value in retirement plans has likely been reduced. The required minimum distribution (RMD) rules for certain defined-benefit contribution plans and IRAs are waived for the 2020 calendar year. You can skip your required distribution this year.

FOR BUSINESSES:

4. There is a new refundable payroll tax credit for 50% of qualified wages paid from 3/13/2020 through 12/31/2020 for employers whose (i) operations were fully or partially suspended due to a COVID-19 related shut-down order, or (ii) gross receipts declined by more than 50% when compared to the same quarter in the prior year. The credit is capped at the first $10K of compensation paid to employees.

5. Employer payment of payroll taxes. Employers and self-employed individuals can defer payment of the employer’s share (6.2%) of the Social Security payroll tax, but the deferred amount must be repaid in equal installments by 12/31/2021 and 12/31/2022.

ASSISTANCE FOR SMALL BUSINESSES:

The CARES Act provides two lending programs for small and medium-size businesses to obtain disaster relief. Both can be used though not for the same purpose.

6. The Paycheck Protection Program (PPP):

Loans will be made by banks and commercial lenders authorized to make SBA loans. The application period ends 6/30/2020. The amount of the loan is limited to the borrower’s average total monthly “payroll costs” for the 1-year period ending on the date the loan is made multiplied by 2.5. Payroll costs generally include employee salaries and tips, retirement benefits, severance payments, state and local taxes on employee compensation, but does not include compensation paid to employees and independent contractors in excess of $100,000/year. Loans cannot be obtained if a taxpayer also receives the employee retention tax credit (#4 above). Maximum repayment term is 10 years and maximum interest rate is 4%. Borrowers may apply for loan forgiveness in an amount equal to the cumulative amount of payroll costs, rent, utilities, and interest paid on mortgages during the 8 weeks after the loan is made. The amount forgiven is limited to the extent compensation and headcount are reduced relative to a base period.

7. the Economic Injury Disaster Loan (EIDL) program.

This program allows for emergency loans of up to $2M to assist companies affected by COVID-19. The bill waives the requirement for personal guarantees on loans under $200K, it waives the requirement that the borrower not be able to obtain credit elsewhere, and provides emergency grants of up to $10K within 3 days of the borrower filing an application, though the amount of the grant would reduce any loan forgiveness under the PPP.

These are just some of the highlights. Please reach out to us if you have questions or need our help in applying for disaster assistance.

BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.

BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits; 9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.

Special Contractor Insurance Programs (NY) – We we have 50+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages. We help contractors set up proper risk transfer mechanisms. If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer mechanisms, subcontractor screening, ways to lower your insurance costs that lower them.

New Jersey and Connecticut Contractors: We have a competitively priced (savings up to 50%) General Liability, Umbrella Liability, Business Auto, Workers Compensation program. Want to lower these costs? Get a quote today!

Smart Home Security Systems – Protect and manage what matters most. You’re in control with simple, affordable security, and home automation. Click here to learn more.

Identity Theft – Over the past year hundreds of thousands of people have had to deal with identity theft. This has become such a huge problem so we now offer Identity Theft Protection. We heard stories of kids going for car loans and learning they owe $200,000+ to companies they never heard of. Under our program you can protect yourself, spouse and children. Anyone you know can purchase this protection though our plan! Click here to learn more or sign up.

If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.

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