March 27, 2020 0 comment

Families First Coronavirus Response Act

Hello everybody. Ben Smith here with Etrends Tax and Accounting. This video is specifically for the self-employed or those people who are partners in a partnership and pay self-employment tax and have been affected by the coronavirus. I just got done doing a two part series which you can watch about the Families First Coronavirus Response Act which provides sick leave for employees paid for by the government and essentially administered by their employers and provides credits to employers to pay for that sick leave and I also teased that self-employed people could qualify for these benefits. Well this video is intended to give you the information you need if you’re self-employed to take advantage of these credits.

Under the Emergency Paid Sick Leave Act employees get 10 days of sick leave at 100% of their salary or wage up to $511 per day. That’s if their home for quarantine or under doctors orders or because they’re sick with what they think might be the coronavirus. Employees also receive sick leave again up to 10 days at 100% of their salary or your wage with a cap of $200 per day if they’re home taking care of children because of the coronavirus. In addition, employees get essentially family medical leave up to 10 weeks at 2/3 their salary or wage up to $200 per day.

The self-employed get these same benefits, they get these same credits, but what they don’t get, the IRS is not going to send them like an advance or an expediated refund to pay for these benefits. Instead the self-employed will need to estimate how much of a tax credit they are entitled to based on these rules and then reduce their estimated tax payments by that amount for the year. If you’re paying as many taxes quarterly then you just get to pay a whole lot less, so it’s still a pretty good benefit to you. You still get the benefit very quickly or relatively quickly at least in the next 3 months, but you don’t get actual cash in the mail from the federal government. You just send them less cash okay. This could be confusing. I don’t expect most of you to just go do all this calculating yourself. You might need some help. Give me a call. I can certainly help you and make sure you are paying the right amount of estimated tax, you’re not over paying, that you’re calculating this credit correctly. Of course in the end the self-employed are going to take this credit on their 2020 income tax return. That’s where the credit is actually going to be finally calculated and finally obtained and the way you get it in advance is just by reducing those estimated tax payments. I hope that’s helpful.