Understanding the Tax Implications of Remote Employees

CARES Act For Individuals

The first program for individuals is recovery checks.

These recovery checks are one-off payments to individuals based on 2018 or 2019 income.  You do not have to do anything to receive this money, it is automatic.  

Here is how the program works: 

Single taxpayers whose income was less than 75,000 will receive $1,200, and joint taxpayers whose income is less than 150,000 will receive $2,400. There is an additional $500 for each dependent child under 16. 

Singles with an income of greater than $99,000, head of household with an income of greater than $112,000, and joint filers with an income over $198,000 do not qualify. 

And then, there is a formula to figure out the payment in between. It works this way: the government will reduce the payment by 5% of the amount over the threshold. 

Here is an example:

  • Consider a married couple with no children and an income of $190,000.
  • $190,000 is $40,000 above the $150,000 threshold.
  • The rebate check is reduced by 5% of $40,000, which is $2000.
  • Therefore, they would receive a check for $400. (i.e., $2400 – $2000 = $400)

Other key details for recovery check eligibility include:

  • Nonresident aliens are not eligible for the rebate, yes, even though they filed taxes.
  • The IRS will pay you even if you have an outstanding debt with the IRS (normally, the IRS would offset a refund by paying that debt first).
  • The IRS will deposit the money directly into the account on the last filed return. The plan is for you to receive a letter confirming the disbursement. But you may get the money first. If you never receive the letter, there will be a number to call to have the check reissued.
  • Income comes from your 2019 returns if you already filed. If not, they will look at your 2018 taxes. If you have not filed a return will not receive a check unless you did not file because you only have SSA-1099 or RRB-1099 (social security). The Treasury Department will review those forms for 2019 and send you a check.
  • This program does not consider 2020 income. I do understand that your 2020 income may be much lower than 2019, read below for the unemployment benefits that are now available. We will likely see more stimulus packages as time goes on.

The second program includes changes to unemployment benefits. 

The cares act significantly increases WHO qualifies for unemployment. So if you are an independent contractor, gig worker, freelancer, or sole proprietor, you likely qualify for unemployment. 

Any employee who was furloughed or part of a layoff is eligible for state unemployment. 

Here are the details: 

  • The state determines unemployment amounts, and it is typically 30-50% of your standard wage, but each state has a different formula, so check out the state unemployment website. 
  • Under the CARES act, you would receive the amount the state would already provide plus an additional $600 per week through July 31, 2020. For example, if a person is eligible for $300 weekly, they will receive $900 per week over four months or through July 31, 2020, whichever comes first.
  • If your already unemployed due to COVID-19, you will receive the $600 weekly additional payment retroactively.

Another change is penalty-free retirement distributions

The CARES act allows you to withdraw up to $100,000 retirement in 2020 for COVID-19-related purposes without paying a 10% penalty. The distribution will be taxable over three years unless you elect to pay it back within those three years. 

This rule applies to anyone who:

  • Has been Diagnosed with COVID-19.
  • Has family (spouse or dependent) who have been diagnosed with COVID-19.
  • Has experienced adverse financial consequences related to COVID-19.

The act waives minimum distribution for 2020. 

And caps on charitable contributions change as well. 

  • For the tax year 2020, you do not itemize deductions, you can deduct up to $300 in addition to the standard deduction for cash charitable contributions (not, however, stock contributions).
  • The act removed the 60% adjusted gross income limitation for 2020 (other than from donor-advised funds).
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Jeff Coyle, CPA

Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.

He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.

His business experience includes:

Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.

Jeff also has a long history of helping individuals manage their taxes and plan their finances including:

Income tax planning and strategy.
Filing quarterly and annual taxes.
Audit support.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.

Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.

Jody H. Chesnov, CPA

Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004.  After a career of public accounting and general management, Jody knows the value of good financials.  Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.

He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles.  His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.

He has a particular expertise in early-stage growth companies.  His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.

Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller.  He has experience across industries, which gives him a deep understanding of business.

Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.

In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.  

He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.