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Coronavirus (COVID-19): Small Business Tax Information

Last Updated On: 5/14/2020 10:57:21 AM

I operate a small business as a sole proprietor, an LLC, partnership or a corporation and end my accounting year on December 31. Is my federal tax-filing deadline extended?

Yes. The coronavirus relief has been expanded to cover almost all entities. Individuals, corporations, trusts, estates, fiscal year partnerships, associations, and companies with due dates on April 15, exempt organizations, and investors with investment income are all eligible for filing and payment deferrals until July 15.

What about my state tax filing deadline?

West Virginia has decided to extend the state tax filing and payment deadlines to July 15, 2020. 

What if I need more time to prepare my return?

You can file for a federal extension. Please see this page.

Does this affect my refund?

This should not affect you if you’re receiving a refund. You should still expect to see your refund within the normal time period (within 21 days of electronic filing).

What types of payments does this deferral cover?

This extension covers income tax payments, including normally associated interest and penalties (such as the failure-to-pay penalty). It also covers estimated tax payments (included payments of tax on self-employment income) that would be due on April 15, 2020.

How much can I defer?

There is no limit to the amount of tax payment you can defer.

Does this deferral apply to 2020 estimated tax payments (including estimated self-employment taxes)?

Both the first quarter 2020 estimated tax payment due on April 15, 2020 and the second quarter estimated tax payment due on June 15, 2020 are deferred until July 15, 2020. Please see this page for instructions on deferral. 

I currently operate a small business. What tax credits does the FFRCA have for me?

Due to COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid childcare leave when employees’ children’s schools are closed or childcare providers are unavailable. Fortunately, the act also created two refundable credits—the Paid Sick Leave Credit and the Paid Child Care Leave Credit—for eligible employers.

What employers may claim the FFCRA tax credits and any exemptions for small businesses?

Please see this page for information about credits and exemptions. 

Who is an eligible self-employed individual for purposes of the FFCRA’s tax credits?

Please see this page.

What is the Employee Retention Tax Credit?

The Employee Retention Credit is a refundable tax credit against certain employment taxes that can equal up to 50 percent of wages that an eligible employer pays to employees between March 12, 2020 and January 1, 2021. Please visit this page for the latest information on the credit. 

My business currently has Net Operating Losses. How does the stimulus bill affect me?

Under the CARES act, a NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back for five years to fully offset income. Additionally, businesses can carry their 2020 net operating losses forward without having to worry about the 80 percent limitation set by the TCJA, because the CARES Act has temporarily removed it due to COVID-19.

Am I allowed to take more of a business interest expense deduction?

Unless they elect otherwise, corporations may increase the interest expense deduction limitation to 50% of adjusted taxable income for tax years beginning in 2019 and 2020. However, partnerships and partners can only increase business interest expense deductions for 2020.

I am using this time to improve the interior of my business. Is there a write-off for that?

Most interior improvements make your nonresidential business property “qualified improvement property.” The CARES Act now allows businesses to either depreciate the improvement expenses over a 15 year period or immediately expense its cost. The CARES Act also made this change apply retroactively to past improvements on property placed in service after 2017.

Are there any of write offs I should consider such as income spent for cleaning, healthcare, canceling events that I should be aware of?

If you are a self-employed individual, you generally may deduct expenses allocable to the business use of your home if you use a part of your home exclusively and regularly as your principal place of business. Since you are now likely teleworking, your home office may qualify as “regular” use. Unfortunately, at this time, it seems unlikely that a temporary need to work from home will be enough to meet the home office deductibility standards unless a modification is made in light of COVID-19 stay-at-home orders.

If you are a business owner, income spent for cleaning, healthcare, and canceling events likely can qualify as a “disaster relief payment” that is paid for the benefit of for the benefit of its employees. Under the tax code, disaster relief payments are excluded from gross income and are not subject to federal income or employment taxes.
This is general legal information. For guidance about your situation, talk to a lawyer.