Credits available for companies affected by COVID-19

POR Hispanic Entrepreneurs • May 27, 2020

Given the negative effects of the pandemic, companies can access financial aid that allows them to maintain employees and grant licenses to those who cannot work. Meet with Hispanic Entrepreneurs that credits available to companies affected by COVID-19.

Financial assistance for companies

Many companies in the United States can access the financial credits that have been made available through the CARES Act. The intention of these is to allow them to continue operating and to overcome the difficulties that the coronavirus pandemic has imposed.

In this sense, the Internal Tax Service recalled the three new loans that these companies can access.

Read on and find out what they are. In addition, we remind you that people can also access the payment of economic impact for coronavirus.

New credits available for companies

Businesses affected by the coronavirus can benefit from financial assistance from the government. In this case we will refer to three of them:

Employee retention credit.
Credit for paid sick leave.
Expansion of family leave due to illness.

Access to Employee Retention Credit

This loan is aimed at enabling companies affected by the coronavirus to keep employees on the payroll. It's about a 50% refundable tax credit of up to $ 10,000 in wages paid.

Businesses of any size, including organizations exempt from tax, are eligible. However, small businesses that have applied for loans through the Check Protection Program; as well as state and local governments and their instruments, they will not have access to it.

To qualify, the business must have suspended all or part of its activities by order of the Government due to the coronavirus. Those who have had a reduction in their gross income also apply.

In the latter case, the IRS specifies that the income must be less than 50% of the equivalent quarter in 2019. When the income of the calendar quarter exceeds 80% of the equivalent period the previous year, the employer is no longer eligible.

How much is the credit and how to claim it?

The employee retention credit is 50% of up to $ 10 in qualified wages paid to an employee. In other words, the maximum amount is $ 5,000.

Qualifying wages depend on the average number of full-time employees the business had in 2019:

If you had 100 or fewer employees on average, the wages paid to everyone, whether they worked or not, will be taken into account.
With a higher average, credit is allowed for wages paid for the time they did not work.

Employers can claim the credit for wages paid as of March 12, 2020 and before January 1, 2021. They will report total qualifying wages and health insurance costs on the quarterly tax return.

It is also possible to reduce the amount of the federal employment tax credit. If you do it this way, the employer must indicate the reduction using Form 941.

The IRS has a page of frequently asked questions about credit to clarify doubts in this regard.

Credit for paid sick leave and expansion of family sick leave

These benefits are also part of the Government response to the coronavirus as part of the CARES Law. This regulation establishes that companies must grant a license to employees who cannot work due to the coronavirus. These are entitled to paid leave of up to 10 days (80 hours) at the employee's regular rate of pay up to $ 511 per day and $ 5,110 in total.

Also, workers who need to care for someone with coronavirus are entitled to a license. In this case, leave is for up to 2 weeks (80 hours) at 2/3 of the employee's regular pay rate; up to $ 200 per day and $ 2,000 total.

Employees who must stay home with their children because school or child care provider is not available can also receive up to 10 weeks of leave for the family and sick credit paid at 2/3. So they will receive up to $ 200 per day and $ 12,000 total.

There are six reasons why employees can access these licenses:

He has an order from the authorities to remain in quarantine or isolation by COVID-19.
Self-quarantined by COVID-19 at the indication of a healthcare provider.
You have symptoms of COVID-19 and await medical diagnosis.
You are in the care of a person who is quarantined for reasons 1 and 2.
You must care for a child because school or child care is not available due to the coronavirus.
For some other situation similar to those established by the Secretary of Health and Human Services.

You can consult the IRS to define if your company qualifies for any of the credits available to companies affected by COVID-19. On their website they keep the information updated and indicate how your business can access these financial aids.