Taxes

General Information for Taxpayers

  • Taxpayers need to be on the lookout for calls and email phishing attempts about coronavirus. These contacts can lead to tax-related fraud and identity theft. Taxpayers should watch out for calls, emails, text messages, websites and social media attempts that request money or personal information. For more information on coronavirus-related or other phishing attempts please click here.

Information for Small Businesses

Paycheck Protection Program (PPP) Expenses Now Tax Deductible

The Internal Revenue Service (IRS) recently announced that PPP loan recipients whose loans are forgiven are not required to treat the loan proceeds as taxable income and can deduct expenses paid with a forgiven PPP loan from their taxes. The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 explicitly included this change, which was based bipartisan Small Business Expense Protection Act that Senator Baldwin supported.

Click here for more information from the IRS regarding the deduction of PPP expenses.

Employer Tax Credits

Many businesses that have been severely impacted by coronavirus (COVID-19) will qualify for two new employer tax credits – the Credit for Sick and Family Leave and the Employee Retention Credit. 

Sick and Family Leave

Credit for Sick and Family Leave

An employee who is unable to work (including telework) because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis, is entitled to paid sick leave for up to ten days (up to 80 hours) at the employee’s regular rate of pay, or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $511 per day, but no more than $5,110 in total.

Caring for someone with Coronavirus

An employee who is unable to work due to caring for someone with coronavirus, or caring for a child because the child’s school or place of care is closed, or the paid child care provider is unavailable due to the coronavirus, is entitled to paid sick leave for up to two weeks (up to 80 hours) at two-thirds the employee’s regular rate of pay or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $200 per day, but no more than $2,000 in total.

Care for children due to daycare or school closure

An employee who is unable to work because of a need to care for a child whose school or place of care is closed or whose child care provider is unavailable due to the coronavirus, is also entitled to paid family and medical leave equal to two-thirds of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to ten weeks of qualifying leave can be counted towards the family leave credit. 

Note: The emergency paid "sick leave" and expanded "family and medical leave" requirements of the Families First Coronavirus Response Act of 2020 are no longer mandated as of December 31, 2020.  Under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, the refundable tax credit for sick and family leave was extended until March 31, 2021 for employers who opt to provide it. If the employee has already used this leave in 2020, employers cannot claim the credit for that employee in 2021. 

Employers should consult with an attorney and/or a tax professional if they have questions regarding leave requirements and tax credits.

Click here to connect with Legal Action of Wisconsin.

Click here for help finding a tax preparer courtesy of the IRS and the State of Wisconsin Department of Revenue.

Credit for eligible employers

Eligible employers are entitled to receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave, for the period of April 1, 2020, through December 31, 2020.  The refundable credit is applied against certain employment taxes on wages paid to all employees. Eligible employers can reduce federal employment tax deposits in anticipation of the credit.  They can also request an advance of the paid sick and family leave credits for any amounts not covered by the reduction in deposits. The advanced payments will be issued by paper check to employers.

Employee Retention Credit

Eligible employers can claim the employee retention credit, a refundable tax credit equal to 50 percent of up to $10,000 in qualified wages (including health plan expenses), paid after March 12, 2020 and before January 1, 2021.  Eligible employers are those businesses with operations that have been partially or fully suspended due to governmental orders due to COVID-19, or businesses that have a significant decline in gross receipts compared to 2019.

The refundable credit is capped at $5,000 per employee and applies against certain employment taxes on wages paid to all employees.  Eligible employers can reduce federal employment tax deposits in anticipation of the credit.  They can also request an advance of the employee retention credit for any amounts not covered by the reduction in deposits. The advanced payments will be issued by paper check to employers.

Click here to read more about employer tax credits. 

Tax Relief 

The IRS has developed an online tool to help you determine if you or your business is likely to qualify for one or more of the tax relief options currently available.

Click here to access the IRS’ COVID-19 Business Tax Relief Tool. 

Scams

IRS.gov/coronavirus is the official IRS source for information on relief related to COVID-19. Be on the lookout for scam artists trying to use this relief as cover to steal personal information and money. The IRS will not call, text, email or contact anyone on social media asking for personal or bank account information. Also, watch out for emails with attachments or links claiming to have special information on relief. 

Additional Information

Click here for more information from the IRS on coronavirus tax relief for businesses and tax-exempt entities. 

Downloadable materials from the IRS:

Publication 5420-D, A Toolkit for IRS Partners - Small Business Relief: Employer Tax Credits, Paid leave for employees, & Relief for compliance efforts PDF

Publication 5420-E, A Toolkit for IRS Partners – COVID-19 Relief for: Tax Exempt Organizations PDF


Disclaimer: The information provided on this webpage does not, and is not intended to, constitute legal or tax preperation advice from Senator Baldwin. All information, content, and materials available on this page are for general informational purposes only.  

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