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COVID-19 for Businesses

March 20, 2020 Author: Joe Paulson, CPA, Partner, Compass Pointe CPAs

Compass Pointe CPAs Greenwood Indianapolis Indiana

In these unprecedented times, we here at Compass Pointe CPAs are closely monitoring the everchanging business climate due to COVID-19 and its market impact. We understand that all businesses and their owners are being greatly impacted by these uncertain times. Whether relating to employment, payroll taxes, or general business operations, there are many important decisions to be made in the coming days. We are dedicated to providing accountable direction to our clients in all seasons of life and the business environment. As business owners, business leaders, and members of our community, with that in mind, we are happy to consult with you on any questions and concerns you may have during these times.

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, H.R. 6201 into law. The Act responds to the COVID-19 outbreak by providing paid sick leave and free COVID-19 testing. The Act also expands food assistance and unemployment benefits.

Government entities and employers with fewer than 500 workers are mandated by the Act to provide up to 80 hours of paid sick leave to all covered employees and up to 10 weeks of paid family leave for certain employees affected by COVID-19 who have worked at the company for at least a month.

The Act provides a series of tax credits to employers and self-employed individuals to help cover lost income due to the COVID-19 outbreak.

Emergency Paid Sick Leave

The emergency paid sick leave provides the following:

- Employers with fewer than 500 workers are required to provide 80 hours of paid sick leave to full-time employees

- For part-time employees, paid sick time amounts to the number of hours the employee would work, on average, over a two-week period

- Ensures paid sick leave covers days when any of the following occur:

  • An employee’s child’s school or daycare is closed
  • An employee or a family member whom the employee cares for is quarantined due to COVID-19
  • The employee is experiencing symptoms related to COVID-19 and is seeking a medical diagnosis

- These wages are exempt from the employer’s portion of Social Security tax and an additional payroll tax credit is allowed for the amount of Medicare tax paid on those wages.

There are caps on the tax credits for paid sick and paid family & medical leave. Please reach out to your tax advisor as these caps can be complex.

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