Payroll Tax Credit

[Edsel]

May be a repetition of previous questions, but will move this to the top, as the answers were, for the most part, deferred until more information was available. 

The forthcoming 2nd quarter 941 will be upon us before we know it.  Medlin tells us the govt is tampering with a 4-page 941.  I can hardly wait.

The heavy credit is 50% of "qualified wages."  Last time I asked, no one knew what "qualified wages" will be.  I've heard wages in excess of $100K are not eligible, and the credit cannot exceed $5000 for any employee.  I'm quite sure the $100K wages are intended to factor down to $25K for the quarter, or maybe even $30,769 for an 8-week period.  Dunno that either.

And a specific question, for those whose knowledge far exceeds mine:  I have a client who began paying 4 people in late March instead of laying them off.  They were doing this in order to save their jobs and hoping to include their wages in loan forgiveness for the PPP loan.  Sounds good, but after paying these folks, the PPP loan did not arrive until April 27th - and the period of measurement cannot start until then.

We have been told that the loan forgiveness cannot duplicate the costs covered by the PPP period of measurement and the EIDL loan and the 941 credit.  Understand that we cannot double-or-triple dip.  But how about the costs OUTSIDE the period of measurement, such as the 4-weeks paid for four personnel PRIOR to April 27th??  If my client cannot cover those extra four weeks, they will have to eat those wages on their financials.

I'm asking a lot on this post, and will appreciate any response.  I have asked related questions in the past, and the best responses I've received have been "Edsel, please wait, the govt changes every day and will issue new guidelines in May."

[Medlin Software, Dennis]

 

On 5/19/2020 at 8:11 PM, Edsel said:

The forthcoming 2nd quarter 941 will be upon us before we know it.  Medlin tells us the govt is tampering with a 4-page 941.  I can hardly wait.

 

• Current drafts:
• https://www.irs.gov/pub/irs-dft/f941--dft.pdf
• https://www.irs.gov/pub/irs-dft/i941--dft.pdf

 

Quote

The heavy credit is 50% of "qualified wages."  Last time I asked, no one knew what "qualified wages" will be.  I've heard wages in excess of $100K are not eligible, and the credit cannot exceed $5000 for any employee.  I'm quite sure the $100K wages are intended to factor down to $25K for the quarter, or maybe even $30,769 for an 8-week period.  Dunno that either.

 

Quote

 

And a specific question, for those whose knowledge far exceeds mine:  I have a client who began paying 4 people in late March instead of laying them off.  They were doing this in order to save their jobs and hoping to include their wages in loan forgiveness for the PPP loan.  Sounds good, but after paying these folks, the PPP loan did not arrive until April 27th - and the period of measurement cannot start until then.

We have been told that the loan forgiveness cannot duplicate the costs covered by the PPP period of measurement and the EIDL loan and the 941 credit.  Understand that we cannot double-or-triple dip.  But how about the costs OUTSIDE the period of measurement, such as the 4-weeks paid for four personnel PRIOR to April 27th??  If my client cannot cover those extra four weeks, they will have to eat those wages on their financials.

 

 

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Edited May 21, 2020 by jklcpa
moved responses to outside of quote box

[Edsel]

Thanks Medlin.  You've answered these questions as best as one could at this time.

Edsel.