Businesses and individuals have a bit of a reprieve this tax season since the Treasury Department and IRS extended the filing deadline to July 15, 2020 in response to the COVID-19 outbreak. The federal agencies also extended a number of other deadlines to cover individuals, trusts, corporations, estates and more.

“In these most unsettling of times, the government response has been swift and impactful," said Rolando Garcia, Tax Shareholder with Doeren Mayhew, a certified public accounting, audit, tax and business advisory firm.

"Allowing taxpayers additional time to pay taxes coupled with proceeds from the various loan programs is allowing businesses a fighting chance to survive the turmoil caused by COVID-19.”

The firm created a tax toolkit for Houston business owners. Here are the some of the takeaways:

• Federal and state tax deadlines that have been extended to July 15 include:
  • Form 1041 (Estates and Trusts)
  • Form 1120 (C Corporations)
  • Form 1040 (Individual)
  • Texas Franchise Tax Filing and Payment
     
• Businesses may be eligible for a number of new tax credits, including the Payroll Tax Deferral. 
  • This tax credit defers the payment of the employer’s matching portion of FICA. This applies to payroll taxes due from March 27, 2020 until Dec. 31, 2020.
     
• The CARES Act introduced significant changes to the current tax law. Here's an outline of key provisions small business owners should consider to create liquidity: 
  • Qualified Improvement Property: Allows for depreciation as a 15-year property and bonus depreciation for property acquired and placed in service after Sept. 27, 2017.
  • Net Operating Losses: For business losses arising in 2018, 2019 and 2020, a 5-year carryback is allowed. Businesses will be able to amend or modify tax returns for tax years dating back to 2013 in order to take advantage of the carryback.
  • Business Interest Expense Limitation: Adjusted taxable income limitations have been amended from 30% of adjusted taxable income based on earnings before income tax, depreciation and amortization (EBITDA) to 50% for 2019 and 2020.
     

Click here for small and medium-sized business resources in response to COVID-19. The page also includes updates, guidance for employers and more information. And sign up for daily email alerts from the Partnership as the situation develops.