It’s no secret that 2020 was a whirlwind of a year for business owners and accountants alike. With so many new COVID-19 laws and cut-off dates to keep up and so little time, it can be hard for your clients to keep up with all of the COVID-related deadlines...
...That’s why your clients rely on you to stay up-to-date with all of the latest COVID-19 deadlines and keep them on track to meet said deadlines.
5 COVID-19 deadlines to keep in mind
Maybe you helped your client take advantage of the Employee Retention Credit (ERC). Or, maybe you guided them through applying for a Paycheck Protection Program (PPP) loan. Whatever the case may be, your clients need to know the coronavirus relief deadlines to keep on their radar.
To keep your clients in the loop and on time with COVID-19 deadlines, check out these five coronavirus deadlines.
1. Deferred Social Security taxes
At some point or another, your client may have taken advantage of deferring employee and/or employer Social Security taxes.
Deferred employer SS taxes
Thanks to the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), employers could opt to defer payments for the employer portion of their Social Security tax liability through the end of 2020.
With the deferral, employers could defer the employer portion of SS tax due from March 27, 2020 – December 31, 2020.
If a client deferred the employer portion of Social Security tax, remind them of the following IRS due dates:
- December 31, 2021: Employers must pay back at least 50% of the deferred amount
- December 31, 2022: Employers must pay back the remaining amount of deferred employer SS tax
Keep in mind that the employer Social Security tax deferral is different than a payroll tax credit.
Deferred employee SS taxes
In August 2020, the then-president issued executive orders to provide additional coronavirus relief. One of them was an employee Social Security tax deferral.
With the employee SS tax deferral, employers could only defer Social Security taxes for certain employees. Employees whose pay is less than $4,000 biweekly (pre-tax) could opt into the deferral. The deferral period was September 1, 2020 – December 31, 2020.
Although your clients can no longer let employees defer their portion of SS tax, they do have additional time to collect and remit the deferred taxes from employees. Originally, employers were required to withhold and pay the deferred employees’ SS taxes between January 1, 2021 – April 30, 2021. Now (thanks to the Consolidated Appropriations Act, or CAA), employers have until December 31, 2021 to collect and pay back the deferred employee Social Security taxes.
Remind applicable clients to withhold a portion of the deferred SS tax from employee wages if they haven’t started already. Employers can also opt to collect the deferred taxes from the employee using another arrangement.
Make sure to have your clients mark their calendars for December 31, 2021 to ensure they collect and remit any deferred employee SS taxes on time.
2. Paycheck Protection Program loans
By now, you’re likely a pro at answering PPP-related questions, helping clients apply for PPP loans, and guiding them through the PPP loan forgiveness process. But, it doesn’t hurt to brush up on the oh-so important upcoming deadlines.
As you know, the CARES Act established the Paycheck Protection Program (PPP) in 2020. The PPP provides forgivable loans to small businesses to help cover payroll costs and non-payroll costs (e.g., utilities). The program incentivizes businesses to retain employees on payroll.
Originally, the PPP closed on August 8, 2020. However, the Consolidated Appropriations Act renewed funding and reopened the program through March 31, 2021. This means your clients have until March 31 to apply for their first or second PPP loan. If a client is looking to apply for a PPP loan, make sure you help them apply for a forgivable loan before the due date.
When the time comes, guide your clients through PPP loan forgiveness. Your clients can apply for forgiveness any time up to the loan’s maturity date. If your client receives a PPP loan, their loan payments are deferred until they receive loan forgiveness from the Small Business Administration (SBA). If your client doesn’t apply for forgiveness within 10 months after the last day of the covered period, their PPP loan payments are no longer deferred, and they have to begin making payments to their lender.
Although the most recent COVID-19 legislation, the American Rescue Plan, did not extend the PPP’s March 31 deadline, it did provide an additional $7.25 billion in funding for the program. With the additional funding, future legislation could potentially extend the PPP’s application deadline, so be sure to keep your eyes peeled.
3. Employee Retention Credit
The Employee Retention Credit (ERC or ERTC) was another CARES Act relief measure. Under the ERC, eligible employers who are able to keep employees on payroll can claim a fully refundable tax credit.
Like with the PPP, the Consolidated Appropriations Act also expanded the Employee Retention Credit in December 2020. Before the Act was passed, the ERC counted toward qualified wages eligible employers paid employees between March 13, 2020 - December 31, 2020. Under the CAA, employers could claim the ERC on qualifying wages through June 30, 2021.
The CAA also made it possible for employers to take the ERC and participate in the PPP. Before, businesses had to opt for one or the other.
Although the CAA extended the ERC through June 2021, the newly signed American Rescue Plan took things one step further by extending the credit through December 31, 2021. This means that employers now have until the end of this year to take advantage of the Employee Retention Credit. And under the American Rescue Plan, even more businesses, including some startups, are now eligible for the ERC.
Make sure your clients know that they can now take advantage of both the PPP and ERC and may now be eligible for the ERC. And, be sure to remind them of the Employee Retention Tax Credit’s deadline of December 31.
4. Economic Injury Disaster Loans
Along with other changes, the Consolidated Appropriations Act and American Rescue Plan also provided additional funding for the Economic Injury Disaster Loan (EIDL) program. The EIDL program was created to help small businesses affected by a declared disaster, like the coronavirus.
The EIDL ran out of funds in July 2020. But now that the CAA and American Rescue Plan replenished funds, business owners now have until December 31, 2021 to apply.
Keep in mind that the EIDL program could potentially run out of funds before the December 31 application deadline. If your client qualifies, let them know to apply as soon as possible.
5. Paid leave
The Families First Coronavirus Response Act (FFCRA) provided a number of relief measures, including coronavirus-related paid sick time and paid family and medical leave.
The FFCRA required that qualifying businesses provide paid leave to certain employees between April 1, 2020 – December 31, 2020.
Although FFCRA paid leave is no longer mandatory, it is still optional for employers because of the Consolidated Appropriations Act and American Rescue Plan.
Originally under the CAA, employers could opt to offer employees paid leave between January 1, 2021 – March 31, 2021 and take advantage of the credit. Thanks to the American Rescue Plan, paid leave tax credits have been extended once again. The latest COVID legislation allows employers who opt to provide COVID-19 paid sick and family leave to claim credits between April 1, 2021 - September 30, 2021.
Employers who provide paid leave to employees are entitled to an employer tax credit until September 30, 2021.
Let your clients know that they now have until September 30 to take advantage of the optional paid leave’s corresponding tax credit and that they are not required to offer COVID-19 paid leave.
Deadlines and potential COVID-19 legislation
Keep in mind that due dates can change based on what kind of COVID-19 relief legislation passes. New legislation could extend some of the current deadlines for your clients or firm.
To ensure you’re staying up-to-date with the latest legislation news, subscribe to tax and payroll blogs and check the news regularly. That way, you and your clients won’t miss a beat.
Author Bio: Maria Tanski-Phillips is a Content Writer at Patriot Software, LLC. Patriot Software offers online accounting software and payroll for business owners and their accountants. At Patriot, Maria enjoys providing helpful and practical content for business owners.