Small business owners should take note of these coronavirus tax credits

They'll help you take better care of your employees.

Small business owners should take note of these coronavirus tax credits

If you own a small business, the Great Lockdown has probably been difficult. Whether you've been forced to shut down or have been able to stay open (despite the risk) as an essential business, these are turbulent economic times, and your company is probably feeling some adverse financial effects.

But there is help for business owners, some of it in the form of tax credits. In particular, the IRS has highlighted new credits for employers including the employee retention credit and credits for paid sick leave and family leave.

Taking advantage of these credits could save your company money while enabling you to better protect your employees. Here's how they work.

The employee retention credit

The employee retention credit is a refundable tax credit available to employers who have seen their gross receipts decline compared with last year or who had to fully or party shut down because of government orders. The credit is worth up to 50% of as much as $10,000 in qualified wages (including health plan expenses) paid to employees between March 13 and Dec. 31 this year.

1040 form with refund check sitting on it.

Because of the $10,000 wage cap, the maximum value of the credit is $5,000 per employee. The credit is applied against the employer's share of Social Security and railroad retirement benefit taxes. But because it is fully refundable, employers are entitled to a refund even if the amount of the credit exceeds the taxes due. Eligible employers can reduce the amount of federal taxes they're depositing if they expect to receive this credit and/or can request an advance on it, in the form of a check.

The new credits for paid sick leave, family leave

Coronavirus relief provided new options for paid sick leave for people who get the coronavirus, who must care for someone with the coronavirus, or who have to care for children because their day care or schools have closed. Employers who pay out required sick leave or family leave can receive a credit for the full amount paid out.

Employees are eligible for paid leave under the following circumstances:

Those who can't work because they are quarantining or because they're experiencing coronavirus symptoms and waiting for a diagnosis are entitled to up to 10 days of paid sick leave at the higher of their standard pay or the federal or state minimum wage. The maximum payment is $511 per day and $5,110 for the 10 days. Employees who can't work because they're caring for someone with coronavirus or because their child care became unavailable for a coronavirus-related reason are entitled to up to two weeks of paid leave at the higher of two-thirds of their pay or federal or state minimum wages. The maximum payout is $200 daily and $2,000 total. Employees who can't work because they must care for a child whose school or day care is closed for coronavirus-related reasons are also eligible for paid family and medical leave for up to 10 weeks. They're paid at two-thirds their regular pay, up to a maximum of $200 daily and $10,000 total.

Employers can claim a credit for the full amount they pay out for this leave, as well as any health plan expenses and their share of Medicare taxes. They can apply the credit against their employment tax obligations and reduce their payments to the IRS in anticipation of the credit and/or can request an advance on the credit, in the form of a check.

Take advantage of the tax credits available to you

During these difficult times, the assistance the government provides could make all the difference in keeping your company operating and keeping key staff members on the payroll.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Offer from the Motley Fool:The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Source: https://www.usatoday.com/story/money/2020/06/14/own-a-small-business-you-need-to-know-about-these-coronavirus-tax-credits/111948920/

News Related

ORTHER NEWS

Trump’s ‘mission accomplished’ moment is premature and deadly. We have not defeated COVID.

Desperate for crowds and adoration, Trump has put his most fervent supporters at risk of getting a deadly disease. Future historians will be astonished. Read more »

NFLPA president JC Tretter says NFL is putting season, players at risk with its coronavirus approach

NFL Players Association president JC Tretter said Tuesday the NFL is putting the 2020 season at risk with its coronavirus approach, calling on the league to better “prioritize player safety.” “Like many other... Read more »

Brazilian President Jair Bolsonaro says he tested positive for the coronavirus

RIO DE JANEIRO (AP) — Brazil’s President Jair Bolsonaro says he has tested positive for COVID-19 after months of downplaying the virus’ severity. Bolsonaro confirmed the test results while wearing a mask and... Read more »

Venice Film Festival forges ahead amid COVID-19 pandemic with reduced lineup

The show will go on for the Venice Film Festival in September, but with a few modifications due to the COVID-19 pandemic. Organizers said Tuesday that they are pushing forward with plans for... Read more »

Amtrak offers buy-one, get-one promotion on its sleeper trains amid COVID-19 — with a catch

Amtrak wants you to have sweet dreams the next time you travel — so much so that it’s sweetening the deal on its sleeper “roomettes.” The rail service is offering a buy-one-get-one-free discount... Read more »

Florida teen treated with hydroxychloroquine at home before dying of COVID-19, report says

FORT MEYERS, Fla. – The family of a 17-year-old Florida girl who died last month from COVID-19 treated her symptoms at home for nearly a week before taking her to a hospital, a... Read more »

Mookie Betts worried MLB coronavirus testing woes could prevent him from ever playing for Dodgers

During nearly four months away from the game, Mookie Betts said he “stayed away from baseball to keep myself sane.” It’s not hard to understand why. The 2018 American League Most Valuable Player... Read more »

Tom Hanks doesn’t get ‘how common sense has somehow been put into question’ with coronavirus

Read more »

Can Gov. DeSantis force Florida schools to reopen amid the coronavirus pandemic? Some school leaders seem doubtful.

PALM BEACH, Fla. — As concern about the state order spread online, some school leaders said: Not so fast. As Florida educators puzzle over how to start the new academic year, Gov. Ron... Read more »

Texas surpasses 200,000 coronavirus cases after 4th of July holiday weekend

AUSTIN, Texas – Texas reached 200,000 total COVID-19 cases Monday, just 17 days after crossing the 100,000 threshold, a figure that took the state nearly four months to hit. The grim milestone came... Read more »