What are the Advantages of the Refundable Payroll Tax Credit & Tax Deferral?
The payroll-tax deferment and tax credits are open to all businesses and can be put into action immediately to help with economic distress due to coronavirus
Businesses owners who keep their workers on payroll during the coronavirus health crisis are eligible for a refundable payroll tax credit, according to CNBC. The credit is available through 2020 and is equal to 50% of wages (including qualified health plan expenses) of up to $10,000 per worker.
Employers can claim the credit against quarterly payroll taxes and can receive advance payments of the tax credit.
The deferment acts like an extension on a tax filing deadline, while small businesses will still owe the payroll taxes, they won’t have to file them for the rest of 2020. Employees will still have their share taken from their own checks.
Businesses still have to pay the money back at a later time, but the measure allows them to free up cash now to keep staffers on payroll. Companies do not qualify for the deferment or credit if they take a loan via the new stimulus Paycheck Protection Program.