As we get closer to the April 15, 2020, deadline for individuals and businesses to file their income taxes for the previous year, it's very likely you have already begun seeing tax debt relief commercials on TV and hearing them on the radio.
One aspect that you may not have considered is how much of an impact the 2020 general election could have on the tax system as a whole. For example, 2016 saw the election of Donald Trump to the White House, ushering in a swath of changes to the American tax system dubbed the Tax Cuts and Jobs Act of 2017. Though the legislation dealt more with a series of tax cuts that totaled more than $1.5 trillion, it changed a number of deductions that may have impacted your taxes on a personal or professional level.
As Trump sets to face off with whoever breaks through on the Democratic side, the difference in how each party plans to tax the public will be on display. Democratic front-runners Joe Biden, Elizabeth Warren and Bernie Sanders all have similar views in some aspects and completely conflicting views in others. Warren and Sanders want to take a more drastic approach to debt forgiveness, with plans to ax student loan debt from the ledger, for example. We expect all small business owners will be paying attention to the election and its impact on taxes in 2020.
March 2020: Over the last few weeks, the entire planet has had to adjust to life as governments around the world attempt to contain the novel coronavirus, or COVID-19. With thousands of people losing their jobs nearly overnight, the federal government has implemented measures to help taxpayers.
On March 21, the Treasury Department and the IRS announced that it was pushing back the tax filing deadline from April 15 to July 15, 2020. As a result, federal income tax payments that were due in April are being pushed back without any penalties or interest being charged to the individual taxpayer. Officials said the deferment applies to everyone, including "individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax."
The IRS urged taxpayers expecting refunds to file as soon as possible, with IRS Commissioner Chuck Rettig stressing that "filing electronically with direct deposit is the quickest way to get refunds."
"Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds," Rettig said. "As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience."
Under the Families First Coronavirus Response Act, the Treasury Department, IRS and the Department of Labor also announced that small and midsize businesses can take advantage of a pair of refundable tax payroll tax credits. The credits, officials said, were created to "immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees."
Under the act, employees can receive up to 80 hours of paid sick leave, as well as paid child care leave when schools are closed or there are no child care providers to help out. Employers will receive full coverage for that paid leave under the act, including health insurance costs, with zero payroll tax liability. Self-employed individuals will get an equal credit.
Companies with less than 50 workers are also exempt from existing requirements "to provide leave [to employees] to care for a child whose school is closed, or child care [that] is unavailable in cases where the viability of the business is threatened," according to the IRS.
The Department of Labor issued a temporary nonenforcement policy, allowing employers some time to comply with the new measures. "Under this policy, Labor will not bring an enforcement action against any employer for violations of the act so long as the employer has acted reasonably and in good faith to comply with the act," officials wrote. "Labor will instead focus on compliance assistance during the 30-day period."