The Senate and House Passes CARES Act of 2020

Richard A. Huffman, CPA, MST

Wright Ford Young & Co, CPAs

On March 27th, 2020, the House passed an amended version of the Senate’s Coronavirus Aid, Relief, and Economic Security (CARES) Act sending to the President to sign into law.

The Act provides a wide sweeping infusion of cash into the economy helping individuals and businesses during these extraordinary times.  Below is a summarized version of the Act explaining all the key details for individuals and businesses including the various loan programs.

Direct financial help to individuals:

  • Rebates of up to $1,200 for individuals and $2,400 for married couples.  People with children can receive $500 per child.  Amounts start to phase out for individuals with more than $75,000 adjusted gross income (AGI) and $150,000 for joint filers based on the taxpayer’s 2019 tax returns or 2018 if 2019 not yet filed.  The amount is completely phased-out for single taxpayers with AGI exceeding $99,000 and $198,000 for joint filers.
  • Waive the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for Coronavirus-related purposes.  In addition, income attributable to such distributions would be subject to tax over three years, and the taxpayer may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.  Further, the provision provides flexibility for loans from certain retirement plans for Coronavirus-related relief.
  • Waive the required minimum distribution rules for certain defined contribution plans and individual retirement accounts in calendar year 2020.
  • Encourages Americans to contribute to churches and charitable organizations in 2020 by permitting them to deduct up to $300 of cash contributions, whether they itemize their deductions or not.
  • Increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations.  For individuals, the 50-percent of adjusted gross income limitation is suspended for 2020.  For corporations, the 10-percent limitation is increased to 25 percent of taxable income.
  • Permit employers in 2020 to provide a student loan repayment benefit to employees on a tax-free basis.  An employer may contribute up to $5,250 annually toward an employee’s student loans and the payment would be excluded from the employee’s income.  The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (for example, tuition, fees, books) provided by the employer under current law.
  • Separately with the IRS announced postponement of April 15, 2020 tax payments now being owed July 15, 2020 individual 2019 IRA contribution deadlines are now extended until July 15, 2020 as well.

Business provisions:

  • Refundable employee retention credit to encourage employers to maintain headcounts computed on a calendar-quarter basis against the 6.2% employer-side social security payroll tax applicable to employers carrying on a trade or business in 2020 which either fully or partially suspend operations due to a government order or which sustain a significant decline in gross receipts (defined as the first calendar quarter after December 31, 2019, for which gross receipts are less than 50% of the amount in the corresponding prior-year quarter and ending with the next quarter in which gross receipts exceed 80% of the corresponding prior year quarter).  The refundable credit is only applicable for wages paid after March 12, 2020, and before January 1, 2021 up to $10,000 in qualifying wages per employee.  The credit is available to certain tax-exempt organizations as well.  If an employer takes out a payroll protection loan under Section 7(a) of the Small Business Act (detailed below) no employee retention credit will be available.
  • Allows employers and self-employed individuals to defer payment of the employer share of the 6.2% Social Security tax on employee wages to be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
  • Allows net operating losses incurred in 2018, 2019 or 2020 to be carried back five years without limitation.
  • Excess business loss rules that originally suspended non-corporate taxpayer losses to $250,000 ($500,000 in the case of joint filers) has been suspended through December 31, 2020.
  • Temporarily increases the amount of interest expense businesses are allowed to deduct on their returns, by increasing the 30-percent limitation to 50-percent of taxable income for 2019 and 2020 and allow businesses to use their adjusted taxable income from 2019 in tax year 2020 for the taxable income limitation.
  • Qualified improvement property (facility improvements) tax life will be corrected to 15-year and be eligible for 100% bonus depreciation retroactively starting 9/28/17 allowing for amended returns.

Relief for small businesses:

  • Extends the qualifications for borrowers and the size of loans that are available through the U.S. Small Business Administration (SBA):
    • During the covered period from February 15, 2020 through June 30, 2020 payroll protection loans fully guaranteed by the federal government through December 31, 2020 [SBA 7(a) loans] are available to any business, private nonprofit, or public nonprofit organization with under 500 employees.  Borrowers can receive loans equal to 2.5 times their monthly payroll (up to $100,000 per U.S. employee excluding payroll taxes), mortgage, rent, and debt payment expense, up to $10 million.  Borrowers can use these loans for a broad range of business expenses including payroll, paid sick leave, mortgage, rent, utilities, and payments on existing debts.  No collateral or personal guarantee is required for a loan and the standard fee is waived.  The loans will have a maximum maturity of 10 years and an interest rate not to exceed four percent.  An additional provision in the CARES Act provides for possible deferment of repayment of the loans for a period of at least six months, but not to exceed a year.
    • The requirements to obtain a loan are as follows:
      • The loan is needed to continue operations during the COVID-19 emergency.
      • Funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.
    • There is a special eligibility rule for businesses in the hospitality and dining industries that have more than one physical location, employ 500 or fewer employees per location and are assigned to the accommodation and food services sector 72 under the North American Industry Classification System.
    • Business that were operating on February 15, 2020 and that have a pending or approved loan application under this program are presumed to qualify for complete payment deferment relief (for principal, interest, and fees) for six months to one year.  Lenders are required to provide such relief during the covered period (if secondary market investors decline to approve a lender’s deferral request, the Administration must purchase the loan).
    • Indebtedness is forgiven (and excluded from gross income) in an amount (not to exceed the principal amount of the loan) equal to the following costs incurred and payments made during the eight week period beginning on the date of the loan:
      • Payroll costs (up to $100,000 per U.S. employee excluding payroll taxes)
      • Interest payments on mortgages
      • Rent
      • Utility payments
    • Forgiveness amounts will be reduced for any employee cuts or reductions in wages below the average number of full-time equivalent employees as of February 15, 2019 to June 30, 2019 or January 1, 2020 until February 29, 2020 (at election of borrower) calculated on a monthly basis.
    • There is relief from these forgiveness reduction penalties for employers who rehire employees or make up for wage reductions by June 30, 2020 and will not apply to an employer between February 15, 2020 and 30 days following enactment of the CARES Act.
  • Expands the SBA’s Disaster Loan Program through 2020 for businesses with 500 or fewer employees as follows:
    • Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
    • Waives the requirement that an applicant be unable to find credit elsewhere
    • Allows lenders to approve applicants based solely on credit scores
    • Applicants can request an emergency advance from the Administrator of up to $10,000, which does not have to be repaid, even if the loan application is later denied.
    • Advances may be used for purposes already authorized under the SBA Disaster Loan Program including:
      • Providing sick leave to employees unable to work due to direct effect of COVID-19
      • Maintaining payroll during business disruptions during slow-downs
      • Meeting increased supply chain costs
      • Making rent or mortgage payments
      • Repaying debts that cannot be paid due to lost revenue
  • The CARES Act also provides benefits to those with loans under Section 7(a) of the Small Business Act OTHER THAN the new paycheck protection loans, in the form of a government subsidy whereby the SBA will pay six months of principal, interest and fees on qualifying loans.

If you have any questions about how you or your business can obtain the many benefits of the CARES Act, contact your WFY tax specialist or email us at info@cpa-wfy.com.

© Copyright 2019. All rights reserved.

cpa exams

Quarterly Update: CPA Exam Passed by WFY Employees

Wright Ford Young & Co. enjoys recognizing colleagues and clients on their achievements and success. WFY enjoys the same opportunity to also recognize our employees by spotlighting those professionals on the WFY team that have made great strides to accelerate their career. Passing the Certified Public Accountant (CPA) exam is just one of those career enhancing accomplishments.

We would like to congratulate the following WFY employees for recently passing all four parts of the CPA exam in the last three months:

  • Manny Trelles – Tax Supervisor

The California CPA exam is a rigorous licensing qualification to pass and has many requirements to accomplish before taking the exam. Fulfilling 150 semester hours, at least 1 year of work experience, and earning a Bachelor’s degree or higher are just a few of the many requirements for the state of California CPA exam.

After a candidate has met all the requirements to take the exam, there are four parts one must pass: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). There are additional requirements to complete for the CPA exam like passing all four sections with a score of 75 or higher, passing the California Professional Ethics Exam (PETH) with a score of 90 or higher, and paying any fees required to prepare and take the exam.

lawyers for warrors

WFY as Title Sponsor for VLI’s 2020 Lawyers for Warriors

For the second year in a row, Wright Ford Young & Co. will be the Title Sponsor for Veterans Legal Institute’s annual Lawyers for Warriors Event.

For years, Veterans Legal Institute has been providing pro bono legal assistance to homeless, at risk, disabled and low income current and former service members to eradicate barriers to housing, healthcare, education, and employment and foster self-sufficiency. Their core values are outreach, compassion, quality, leadership, and empowerment – values that fall in line with WFY’s values.  The Lawyers for Warriors Networking & Fundraising Event is a way to honor hero advocates who have contributed to VLI’s cause.

Veterans Legal Institute and Wright Ford Young & Co. have had a continuous relationship with one another for many years. “We’re honored to stand with our veterans, bringing them the power of pro bono legal services when they need it most,” said Jeff Myers, WFY’s Senior Audit Partner and Co-Managing Partner.  WFY not only makes contributions to VLI, but also supports their services and what they do for veterans and servicemen in need.

If you’d like learn more about this event or donate to Veterans Legal Institute, click here.

 

six new hires

Six New Hires Join WFY Team

Wright Ford Young & Co. is proud to announce we are adding six new hires to our team. We have Cheryl Shelton joining our estates & trusts department, and Brody Alcanter, Marzeh Khanjari, Rajbir Singh, Linh Trinh and Diane Waxler-Milne joining our tax department. WFY is pleased to welcome these new hires to our team.

Cheryl Shelton

In January, Cheryl Shelton started with WFY as an Estates & Trusts Supervisor in our estates & trusts department. She graduated from Cal State Fullerton and continued her education at Western State Law School. Cheryl has worked in accounting for over 15 years. In her spare time, she volunteers with a local dog resue doing adoption events and fostering dogs.

Brody Alcanter

Brody Alcanter joined WFY in January as a Tax Senior. He graduated from Northwood University with a Bachelor’s degree for Business Administration, Accounting, and moved to Orange County shortly after graduating. In his spare time, he enjoys playing golf.

Marzeh Khanjari

In January, Marzeh Khanjari started with WFY as a Tax Senior.  She received her degree in Business Administration with emphasis in Accounting, and has been working as a tax professional for almost 15 years. While she’s away from the office, she likes to travel, watch movies, and play ping pong.

Rajbir Singh

Rajbir Singh joined WFY as a Tax Staff in January.  He graduated from University of California, Riverside, with a degree in Business Administration and Psychology. Rajbir’s hobbies are working out and traveling with his family.

Linh Trinh

Joining us again at WFY as a tax intern is Linh Trin.  She is graduating from Cal State Fullerton this Spring and will become a full-time Tax Staff at WFY after she graduates.  During her free time, she likes to play the piano.

Diane Waxler-Milne

Diane Waxler-Milne joins WFY for this upcoming tax season as a tax intern.  She is currently attending Cal State Fullerton as a senior and will graduate with a Bachelor’s degree in Accounting and Finance. When she’s out of the office and away from school, Diane enjoys time with her husband and three daughters.

 

Interested in joining WFY in one of our departments? f you are interested and qualified for the position above, please email your resumes careers@cpa-wfy.com or go to our Careers page.

 

charitable contributions

WFY’s 2019 Charitable Contributions

For over 12 years, Wright Ford Young & Co. has made it a priority to contribute to many non-profits locally and nationally.

Since 2007, WFY has been helping to give back by donating 1% of our gross revenues each year to charities as a way to help improve the lives of those around us and those less fortunate. We have donated over $1,253,000 since the program’s formation.  In 2019, WFY made donations to over 20 non-profit organizations – our biggest number of charities to date.

We would like to thank all the organizations for everything they do and how much they give to those in need.

Here is the list of organizations WFY contributed to in 2019:

IN STEPPS Academy

Women Helping Women

Big Brothers Big Sisters of OC

Blind Children’s Learning Center

Wetlands & Wildlife Care Center

Veterans Legal Institute

44 Women for Orangewood

The Autism Community in Action

Unplugged Camp

ProSearch – Under the Big Top

Marconi Foundation for Children

OC Community Foundation

Maxloveproject.org

Free Wheel Chair Mission

Stand Up for Kids

Project ALS

Thomas House

Open Medicine Foundation

Olive Crest

Samaritan’s Purse

Family Promises of OC

 

To learn more about our charitable contributions, click here.

payroll tax

Changes with 2020 Payroll Tax and Standard Auto Mileage Rate

written by WFY Accountant, Bonnie Thompson

Beginning January 1, 2020, the following changes go into effect for the withholding of payroll taxes and reimbursement of auto mileage:

SOCIAL SECURITY

The wage base for withholding social security tax has increased to $137,700 The social security tax rate will be 6.2% for both employers and employees for a maximum expense of $8537.40 For Medicare, the rate is still 1.45% each for employers and employees with no limit this year. Continuing in 2020 employees earning in excess of $200,000 will be subject to a mandatory additional 0.9% Medicare tax withholding regardless of their individual tax filing status. This withholding does not require the employer match.

STATE DISABILITY INSURANCE (SDI)

The taxable wage limit has increased to $122,909. The tax rate will remain at 1%. Maximum to withhold is $1229.09

FEDERAL AND STATE UNEMPLOYMENT INSURANCE

Both the Federal and State of California taxable wage bases remain the same for 2020 at $7,000. You will receive notification of your state tax rate. The FUTA tax rate is .06 all year.

STANDARD AUTO MILEAGE RATE

At this time the standard auto mileage rate for reimbursement of deductible costs of operating an auto for business will be 57.5 cents per mile.

For those clients for whom we prepare quarterly tax returns and annual information returns, please submit the necessary information as soon as possible to assist us in preparing your forms on a timely basis. Please be sure that you have given us the most current information on names and addresses of W-2 and 1099 recipients.

We are available to answer any questions you may have regarding the proper reporting and withholding of payroll. Please feel free to contact our office should you need assistance.

orangewood

WFY Donates Items to Orangewood Foundation’s Holiday Gift Drive

It’s a time for giving and WFY has done just that. This holiday season, WFY collected dozens of gifts to be donated to Orangewood Foundation’s annual Holiday Gift Drive.

For every holiday season, the Orangewood Foundation collects items off a wish list they curated to help young adults transition from the foster system into independent adulthood.  Items such as pillows, cooking utensils, portable chargers, etc. are gathered by dozens of people each year.  This gift drive helps prevent the ongoing cycle of homelessness with young adults in the Orange County area which many experience in their lifetime.

WFY makes an effort each year to collect items off the wish list to contribute to Orangewood Foundation’s holiday gift drive. We’ve donated many of these items as well as hundreds of dollars worth of gift cards to help their cause.

If you’d like to contribute or learn more, go to Orangewood Foundation’s website here.

 

NYCM Runner Sabrina Reguero Raises Money for Team for Kids

At Wright Ford Young & Co., we are proud to support our community whether it’s locally or nationally. Sabrina Reguero, the daughter of WFY’s tax director Melodie Reguero, decided to run for a cause at the New York City Marathon on Sunday November 3rd.

The marathon course started from Staten Island and went all the way to Central Park in Manhattan. Sabrina ran the 26.2 mile marathon in 5 hours and 7 minutes. She raised approximately $3,000 for the organization Team for Kids on her behalf, almost $400 more than her required minimum. WFY and its employees generously contributed to the organization by donating to Sabrina’s cause.

Team for Kids is a national organization that helps support programs that help build students’ motivation and desire to be physically active for life.  The funding helps pay for training of teachers and coaches, program and practice supplies, and student incentives.

To learn more about TFK, click here.

bruin professionals

Tax Director Melodie Reguero on Tax Planning at Bruin Professionals

On Wednesday, November 20th, our WFY Tax Director Melodie Reguero presented at the Orange County Bruin Professionals meeting.

Ms. Melodie Reguero spoke on tips about year-end tax planning along with Cheryl Gee from UBS. Year-end tax planning is especially critical this time of year to proactively reduce a taxpayer’s risk exposure and tax liability before the new year. If you are interested in tips about year-end tax planning, read our article on Year-End Tax Saving Moves for Individuals.

Reguero regularly attends Bruin Professionals meetings, which is diverse group of UCLA alumni who are established in business. The group focuses on commerce, camaraderie, and community. They have several chapters spread all over California. If you are interested in learning more about Bruin Professionals, click here.

 

occf

Proud Sponsor of the OCCF’s 30th Anniversary Annual Meeting

Wright Ford Young & Co. was proud to be a Gold Partner sponsor of the Orange County Community Foundation’s 30th Annual Meeting at the Hotel Irvine on November 20th.

Over 730 attendees shared in the inspirational tributes and recognized success of the OCCF’s philanthropic impact on Orange County individuals, families, and businesses over the last three decades.  The Wright Ford Young & Co. colleagues and guests who joined the celebration were Bob Wright, Dean Smith, Andy Bautista, Richard Huffman, Scott Robinson, Janet Kim, Albert Yang, Darin Schott, Carissa DeLuca and Brad Weber.

To find out more about OCCF, click here.