Recent Guidance for Individuals and Businesses
April 16, 2020

Over the past few days both the IRS and Small Business Administration released additional guidance to help taxpayers navigate the current COVID-19 crisis. See below for additional information available for both individuals and businesses.

Stimulus Payments to Individual TaxpayersGuidance

The IRS announced that it began making stimulus payments of up to $1,200 per taxpayer on Monday, April 13. The IRS indicated that payments this week will go to taxpayers that filed a 2018 or 2019 tax return and included bank account information with their tax returns.

Taxpayers who did not file a 2018 or 2019 tax return may enter bank account details and additional income information on this IRS website to indicate eligibility for a stimulus payment.

Taxpayers who filed a 2018 or 2019 tax return, but did not include bank account information with their tax return may provide bank account information on this IRS website. Taxpayers may also check the status of their stimulus payment on this website.

Small Business Administration Guidance for Self-employed Individuals

The Small Business Administration (SBA) issued a new interim final rule on Tuesday, April 14 that provides answers to frequently asked questions regarding Paycheck Protection Program (PPP) loans for individuals with self-employment income and partners in a partnership.

The additional guidance indicates that individuals with self-employment income should submit a 2019 Form 1040 Schedule C when applying for a PPP loan, as well as additional documentation to support the Schedule C. The additional guidance also provides details on how PPP loan funds may be used and how loan forgiveness will be determined.

The additional guidance also states that partners in a partnership may not submit separate PPP loan applications as self-employed individuals. Instead, self-employment income of partners may be reported as payroll costs of the partnership (up to $100,000 annualized for each partner).

Deferral of Payroll Taxes for Businesses Applying for PPP Loans

The CARES Act provides that employers and self-employed individuals may defer payment of the employer’s portion (50 percent for self-employed individuals) of Social Security taxes incurred between March 27, 2020 and December 31, 2020. Half of the deferred tax is to be paid by December 31, 2021, and the other half is to be paid by December 31, 2022.

The CARES Act stipulates that employers that have indebtedness forgiven with respect to a PPP loan are not entitled to this deferral. However, on April 10, 2020 the IRS issued a Q&A document that says that a business that has applied for a PPP loan may defer Social Security taxes incurred between March 27, 2020 and the date the lender issues a decision to forgive the PPP loan.

Contact the professionals at Gilliam Bell Moser if you have any questions.