CARES Act Tax Credits
Dear Business Owner, Manager, Representative:
The CARES Act included important new tax provisions for business. The Internal Revenue Service (IRS) has now published FAQ’s for many of these measures. Here are the key points:
- Employee Retention Credit - The refundable tax credit is 50% of up to $10,000 in wages per employee paid by an eligible employer whose business has been financially impacted by COVID-19. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. For more information refer to the IRS Frequently Asked Questions (FAQ) document on the Employee Retention Credit.
- Payroll Tax Payments Deferral - Employers and self-employed individuals can defer payment of the employer share of Social Security taxes incurred to December 31, 2020. The amount owed can be paid over the following two years. For more information refer to the IRS FAQ on Payroll Tax Payments document.
- Net Operating Losses (NOLs). Any business that claimed a loss in tax year 2018, 2019, or 2020, may be able to carry that loss back five years. Filing an amended tax return could generate immediate refunds. More information is in the IRS Net Operating Losses FAQ document.
- Business Interest Modification. The amount allowed for business interest deductions enacted as part of the 2017 Tax Cuts and Jobs Act has been increased from 30% to 50% of taxable income for 2019 and 2020.
With best wishes for your health and the success of your business,
Office of Economic Development Team