Stone Law Offices, Ltd.

Estate Plan Updates in the Age of Coronavirus

“Financial advisors and estate attorneys say they are seeing a flurry of inquiries from people seeking to update or draft wills and take other estate-planning measures amid the coronavirus crisis.”

With the ever-increasing number of deaths in Europe and the U.S., many people are now doing what estate planning attorneys have advised them to do for years—get their estate plans in order. Many are having phone meetings or videoconferences with estate planning attorneys, says Barron’s in the article “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know.” People are worried, and they are in a hurry too.

However, estate planning can be complex, even when there is plenty of time to prepare. Here are a few tips:

Everyone should have three basic documents: a last will and testament, a durable power of attorney and an advance health care directive. These documents will allow assets to be distributed, give another person the ability to make financial decisions, if you are too sick to do so and also allow another person to talk to medical professionals on your behalf on treatment and care. These same documents are also a good idea for any young adults in the family, anyone older than 18 in most states.

With the proper documents prepared in accordance with the laws of your state, you may be able to avoid having a court appoint a guardian for minor children or having a probate court determine asset distribution.

However, there’s more. In addition to these basic documents, everyone needs to review their beneficiary designations on assets that include bank accounts, IRAs, annuities, insurance policies and any other assets. If family situations have changed, these may be out of date.

It’s also a good idea to have an attorney create a medical power of attorney for a minor child, in case another family member needs to take a child to the doctor, discuss their care and make decisions.

While young adults may be more worried about the financial impact of the pandemic, seniors and the elderly are concerned about having documents in order. Wealthy people are concerned about the impact that the pandemic may have on estate planning law, and some are engaged in planning to make substantial gifts, in case the current estate and give tax exemptions are lowered.

Other issues to be discussed with an estate planning attorney:

• Irrevocable living trusts, which provide an opportunity to direct how assets in a trust will be held, invested and distributed before and after death.
• Durable powers of attorney, which appoint an agent to make financial decisions.
• Health-care surrogates, which let people designate a surrogate to make health decisions on their behalf and receive health care information from physicians.
• Living wills, which allow people to designate whether to provide life-prolonging treatment, if in a terminal state.

Scammers Beef Up Efforts in a Crisis

“The Inspector General of Social Security, Gail S. Ennis, is warning the public about fraudulent letters threatening suspension of Social Security benefits due to COVID-19 or coronavirus-related office closures.”

As if the elderly didn’t have enough to endure, now comes word that scammers who typically prey on seniors are upping their game. Stating that Social Security offices around the country are closed, which is true, scammers are targeting seniors with letters threatening the suspension of their Social Security payments due to pandemic-related office closures.

It’s true that the offices across the country are closed, but Social Security employees are continuing to work, says the My Prime Time News article “Inspector General Warns Public About New Social Security Benefit Suspension Scam.”

What’s more, the Inspector General notes that the Social Security Administration (SSA) will not suspend or discontinue benefits because their offices are closed. The Inspector General has received reports that beneficiaries are receiving letters that advise them to call a phone number referenced in the letter.

Scammers then talk the callers into providing them with personal information or make arrangements for the seniors to send them retail gift cards, wire transfers, internet currency or even sending cash by mail. Otherwise, they tell the seniors that their benefits will be cut off until the office reopens.

Any communication that is received with that message, by mail, phone or email, is fraudulent and should be dismissed. Social Security will never:

• Threaten with benefit suspension, arrest or legal action, if a fine or fee is not paid,
• Promise a benefit increase or other help in return for direct payment,
• Request or even accept payment by retail gift card, wire transfer, internet currency or prepaid debt card,
• Demand secrecy about payments, or
• Send letters or reports with personally identifiable information through the U.S. Mail.

Anyone who receives a letter, text, call or email that concerns an alleged problem with a Social Security number should not respond. The challenge is that the communications sometimes include a person’s Social Security number, or contains names, addresses or other information that is accurate. This is because scammers have purchased information illegally, not because the information is legitimate. Anyone receiving any communication from Social Security that demands immediate attention or threatens the end of benefits, should not respond directly to that communication.

Instead, report the scam to the Social Security Administration through its website. If you have any doubt about the validity of the letter or email, speak with a trusted friend, family member, or estate planning attorney. Don’t fall for it—especially during these tense times.

Preparing for an Emergency Includes Power of Attorney

If you experienced a temporary illness or needed someone to quickly step in to pay your bills, would your finances be organized enough for them to handle?

Unexpected events can happen at any time. Without a backup plan, finances are vulnerable. The importance of having an estate plan and organized legal and financial documents on a scale of one to ten is fifteen, advises the article “Are you prepared to hand over your finances to someone in an emergency?” from USA Today. Maybe it doesn’t matter so much if your phone bill is a month late but miss a life insurance premium payment and your policy may lapse. If you’re over 70, chances are slim to none that you’ll be able to purchase a new one.

When estate plans and finances are organized to the point that you can easily hand them over to a trusted spouse, adult child or other responsible person, you gain the peace of mind of knowing you and your family are prepared for anything. Someone can take care of you and your family, in case the unexpected happens.

A financial power of attorney (POA) gives another person the legal authority to take financial actions on your behalf. The person you give this responsibility to, should be someone you trust and who will put your best interests ahead of their own. An estate planning attorney will be able to create a power of attorney that can be very specific about the powers that are granted.

You may want your POA to be able to pay bills, and manage your investment accounts, for instance, but you may not want them to make changes to trusts. A personalized power of attorney document can give you that level of control.

Consider your routine for taking care of household finances. Most of us do these tasks on autopilot. We don’t think about how it would be if someone else had to take over, but we should. Take a pad of paper and make notes about every task you complete in a given month: what bills do you pay monthly, which are paid quarterly and what comes due only once or twice a year? By making a detailed record of the tasks, you’ll save your spouse or family member a great deal of time and angst.

Is your paperwork organized so that someone else will be able to find things? Most people create their own systems, but they are not always understandable to anyone else. Create a folder or a file that holds all of your important documents, like insurance policies and investment accounts, legal documents and deeds.

If you pay bills online, naming someone else on the account so they have access is ideal. If not, then try consolidating the bills you can. Many banks allow users to set up bill payment through one account.

Keep legal documents and records up to date. If you haven’t reviewed your estate planning documents in more than three years, now is the time to speak with your estate planning attorney to ensure that your estate plan still reflects your wishes. Call your estate planning attorney to discuss your next steps.

Nursing Home Care Costs and Applying for Medicaid

“Have you priced nursing homes lately? In Texas, you are looking at an average annual cost of $50,000. We are on the low end; nationally, the average annual cost is closer to $75,000. New Jersey costs a whopping $109,500 annually.”

Medicaid provides several programs funded through a state-federal agreement, explains the article “Planning a must: Medicaid and paying for nursing homes” from The Dallas Morning News. One of the programs provides long-term nursing home care benefits to pay for nursing home or approved residential care facilities. However, requirements to qualify for Medicaid vary widely from state to state. It’s best to speak with an elder law attorney, who will be able to help you plan in advance.

Let’s take Texas as our example. To qualify in the Lone Star state, you must have a medical need and fall under the income and asset caps, which change yearly. In 2020, the income limit for an individual is $2,349 and the asset (resource) amount is $2,000. For a married person, your spouse can have income and resources that are protected, $25,728 is the minimum SPRA (the minimum resource protected amount) and the maximum is $128,640. The monthly maintenance needs allowance for a spouse is $3,216.50. If they sound like low levels, they are. However, there are some assets that Texas does not count. The well spouse may continue to maintain the family home, as long as its value is less than $595,000. A car, burial plots and prepaid funeral arrangements are also permitted.

For most people, this presents a bad situation. Their assets are too high to qualify for Medicaid, but they don’t have enough money to pay for nursing home care. That’s where Medicaid planning with an elder law attorney comes in. The attorney will know where assets can be shielded to protect the well spouse and how to work within the Medicaid requirements.

A word of advice: Don’t start giving away assets because you think that you can do this yourself. The first rule: there is a five-year lookback period, and if assets have been distributed within a five year period of the person applying for Medicaid, their eligibility will be delayed. The rules about gifting assets are complicated and mistakes are non-negotiable.

Be careful of elder exploitation. Planning for Medicaid is one thing, being convinced to impoverish yourself so someone else can have a luxurious lifestyle is another. There’s a fine line between the two. Be aware of the difference. An attorney can play an important role here, since they have a legal and ethical responsibility to protect their client’s interests.

Be certain that you have a Durable Power of Attorney in place. Why? If you become incapacitated during the process of Medicaid planning, your agent will be able to help with Medicaid planning and file for the Medicaid application.

Don’t sell your home. In most states, the primary residence is a protected asset for Medicaid. Once it is sold, however, the proceeds of the sale are considered a personal asset and will be counted.

It’s also important to understand that Medicaid does not pay for all nursing home stays. Medicaid pays for a nursing-home designated “Medicaid bed” in a semi-private room. Depending on where you live, there may not be as many Medicaid beds as there are people who need them.

An elder lawyer will be able to help you and your family with planning for Medicaid, and with an application. You’ll be better off relying on the help of an experienced attorney.

Long Term Care Varies, State by State

“States can differ dramatically when it comes to long term care regarding availability, quality, government benefits, retirement communities and cost.”

What if your parents live in Oklahoma, you live in Nebraska and your brothers and sisters live in New York and California? Having the important conversation with your aging parents about what the future might hold if one of them should need long-term care is going to be a challenge, to say the least.

It’s not just about whether they want to leave their home, reports the article “What is the best state for long term care” from The Mercury. There are many more complications. Every state has different availability, levels of care and taxes. If the family is considering a continuing care retirement community, or if the parents already live in one, what are the terms of the contract?

The differences between states vary, and even within a state, there can be dramatic differences, depending upon whether the facility being considered is in a metropolitan, suburban or rural area. There’s also the question of whether the facility will accept Medicaid patients, if the parents have long-term care insurance or any other resources.

Here’s what often happens: you open up a glossy brochure of a senior community in a warm climate, like Florida or Arizona. There are golf courses, swimming pools and a great looking main house where clubs and other activities take place. However, what happens when the active phase of your life ends, slowly or suddenly? The questions to ask concern levels of care and quality of care. Where is the nearest hospital, and is it a good one? What kind of care can you receive in your own apartment? Are you locked into to your purchase, regardless of your wishes to sell and move to be closer to or live with your adult children?

And what happens if you or a “well” spouse runs out of money? That’s the question no one wants to think about, but it does have to be considered.

For people who move to Florida, which has a very generous homestead exemption for property taxes and no state tax, the incentives are strong. However, what if you become sick and need to return north?

For seniors who live in Pennsylvania and receive long-term care and other services, the well spouse’s retirement funds are exempt for Medicaid regardless of the amount. However, if you move over the state’s border to New Jersey, and those accounts will need to be spent down to qualify for Medicaid. The difference to the well spouse could be life changing.

Delaware and New Jersey have Medicaid available for assisted living/personal care. Pennsylvania does not. The Keystone State has strict income limitations regarding “at home” services through Medicaid, whereas California is very open in how it interprets rules about Medicaid gifting.

Contact us at 702-998-0444 to speak with an Estate Planning attorney about Long Term Care requirements in Nevada and other state in the U.S.

The answer of where to live when long-term care is in play depends on many different factors. Your best bet is to meet with an estate planning elder care attorney who understands the pros and cons of your state, your family’s  situation and what will work best for you and your spouse, or you as an individual.

The CARES Act Essentials for Individual Taxpayers and Small Business Owners

Signed into law on Friday, March 27, the CARES (Coronavirus Aid, Relief, and Economic Security) Act is the biggest economic stimulus package in U.S. history.  Below are essential highlights for individuals and small businesses.

Individuals

• One-time direct deposits of up to $1,200 for individual taxpayers with incomes up to $75,000 and $2,400 for joint filers with incomes up to $150,000. An additional $500 for each eligible child can also
• Extended unemployment insurance for the self-employed, independent contractors, and gig economy workers--such as Uber drivers.
• Rules and penalties for some retirement fund distributions and loans have been adjusted or delayed.

Small Businesses

• Employers can defer the payment of their portion of 2020 payroll taxes until 2021 and 2022.
• $350 billion is dedicated to small business relief to prevent layoffs and business closures and includes:
• Paycheck protection program for up to 8 weeks of payroll coverage.
• Economic Injury Disaster Loans and Loan Advance federal disaster loans for businesses, private non-profits, homeowners.
• The 80% rule from the Tax Cuts and Jobs Act (TCJA) net operating loss is lifted, and losses can now be carried back five years.
• The excess loss limitation (ELL) rules for pass-through entities are suspended.
• The limitation on the deduction for business interest expense increased from 30% to 50% for tax years 2019 and 2020.
• $150 billion is dedicated to state and local governments that are beginning to introduce their own business grant and loan programs in states like Florida, Michigan, and New York. Find specific provisions for your state through your governor’s website; see a full list on the National Governors Association site.

Resources: Read the full text of the CARES Act: https://assets.documentcloud.org/documents/20059055/final-final-cares-act.pdf

Fraudulent Social Security Calls Still Targeting Seniors

“You’ve probably received one: A recorded call warns of a problem with your Social Security number. To fix it and avoid legal action, you’re told, you must call back immediately—and pay up.”

You’d think everyone would know to ignore these calls. However, these criminals are so convincing, says The New York Times in the article “How Not to Become a Victim of Social Security Fraud Calls,” that many people fall for the schemes and end up losing money. They buy gift cards and often, give up their personal PIN (Personal Identification Number), losing thousands of dollars.

It’s not clear whether the volume of calls is increasing. However, the government is getting thousands of complaints about them, reports the Social Security Administration’s inspector general, Gail Ennis. There have been 250,000 online complaints made, since a new dedicated digital reporting form was released in November 2019.

Other regulators are also reporting a flood of complaints. The Federal Trade Commission has received more than 166,000 complaints about fraudulent Social Security calls last year, and the average individual loss is about $1,500. The Senate’s Special Committee on Aging said that Social Security impersonation schemes were the single most reported fraud on its fraud hotline last year.

In January, the committee heard from a woman who lost $150,000 in a Social Security scheme.

The government is trying to fight the fraud in a few different ways. The Justice Department took legal action in January against two telecommunication companies that it says serve as “gateways” for illegal robocalls, by funneling them to the U.S. from oversees. However, stopping the calls is not easily accomplished. There are many gateway telecommunications companies, so hitting two just means that the criminals will take their business elsewhere.

Congress passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRADED), which requires telecommunication companies to adopt technology to identify spoofed calls. Spoofed calls are calls that appear to come from legitimate phone numbers. However, the FCC has yet to set rules for how the law will be carried out, so relief for consumers may be as far as a year away.

Here’s what you need to know about Social Security and other fraudulent calls:

• Don’t answer calls from unfamiliar numbers. Let the calls go to voicemail, or the answering machine, if you still use one.
• If you answer the phone and someone demands money immediately, hang up.
• Report the call to the inspector general’s office on the Social Security Administration’s website. There’s a form that asks you to create a unique identification number, so you can ask for that number if anyone calls to verify their identity.
• Be aware that even a phone call that appears to be from Social Security mostly likely will not be from the agency. Schemes that involve a suspension of benefits work because they target senior’s biggest fear—losing their benefits.
• There are other Social Security schemes. Some involve official looking papers, and there has been an increase in the number of scams that start with an official-looking text. The Social Security Administration does not text people, unless they have signed up to have authentication codes sent to your phone when logging into a Social Security account.

There’s not much that can be done by the individual to stop the endless stream of robocalls. You can register your number on the Federal Trade Commission’s Do Not Call list, but that will only reduce calls from legitimate telemarketers. The criminals will still call. The best advice is not to answer the phone, unless it’s from someone you know, and never, ever give in to demands of immediate payment. That’s always a red flag for fraud.

The Second Most Powerful Estate Planning Document: Power of Attorney

“A power of attorney, similar to a last will and testament, is a powerful document that must be created before it becomes necessary.”

All too often, people wait until it’s too late to execute a power of attorney. It’s uncomfortable to think about giving someone full access to our finances, while we are still competent. However, a power of attorney can be created that is fully exercisable only when needed, according to a useful article “Power of attorney can be tailored to circumstances” from The News-Enterprise. Some estate planning attorneys believe that the power of attorney, or POA, is actually the second most important estate planning document after a will. Here’s what a POA can do for you.

The term POA is a reference to the document, but it also is used to refer to the person named as the agent in the document.

Generally speaking, any POA creates a fiduciary relationship, for either legal or financial purposes. A Medical or Healthcare POA creates a relationship for healthcare decisions. Sometimes these are for a specific purpose or for a specific period of time. However, a Durable POA is created to last until death or until it is revoked. It can be created to cover a wide array of needs.

Here’s the critical fact: a POA of any kind needs to be executed, that is, agreed to and signed by a person who is competent to make legal decisions. The problem occurs when family members or spouse do not realize they need a POA, until their loved one is not legally competent and does not understand what they are signing.

Incompetent or incapacitated individuals may not sign legal documents. Further, the law protects people from improperly signing, by requiring two witnesses to observe the individual signing.

The law does allow those with limited competency to sign estate planning documents, so long as they are in a moment of lucidity at the time of the signing. However, this is tricky and can be dangerous, as legal issues may be raised for all involved, if capacity is challenged later on.

If someone has become incompetent and has not executed a valid power of attorney, a loved one will need to apply for guardianship. This is a court process that is expensive, takes several months and leads to the court being involved in many aspects of the person’s life. The basics of this process: three professionals are needed to personally assess the “respondent,” the person who is said to be incompetent. The respondent loses all rights to make decisions of any kind for themselves. They also lose the right to vote.

A power of attorney can be executed quickly and does not require the person to lose any rights.

The biggest concern to executing a power of attorney, is that the person is giving an agent the control of their money and property. This is true, but the POA can be created so that it does not hand over this control immediately.

This is where the “springing” power of attorney comes in. Springing POA means that the document, while executed immediately, does not become effective for use by the agent, until a certain condition is met. The document can be written that the POA becomes in effect, if the person is deemed mentally incompetent by a doctor. The springing clause gives the agent the power to act if and when it is necessary for someone else to take over the individual’s affairs.

Having an estate planning attorney create the power of attorney that is best suited for each individual’s situation is the most sensible way to provide the protection of a POA, without worrying about giving up control while one is competent.

C19 UPDATE: CDC Updates Coronavirus Guidance for Businesses

As we learn more about the coronavirus the Centers for Disease Control (CDC) is updating the guidance they give to business owners and employers. They issued updates on Friday, March 21^st to include

• Updated cleaning and disinfection guidance
• Updated best practices for conducting social distancing
• Updated strategies and recommendations to be implement now to respond to COVID-19

If you are a business owner, you may want to bookmark this page and check back regularly for updates: https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html

Resource: Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19), updated March 21, 2020, https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html

Federal tax update regarding COVID-19

Right now, your highest priority is the health of those you love and yourself. But if you have time to read about some non-medical but important matters related to the health crisis, here is a summary of IRS action already taken and federal tax legislation already enacted to ease tax compliance burdens and economic pain caused by COVID-19 (the “Coronavirus”).

Filing and payment deadlines deferred. After briefly offering more limited relief, the IRS almost immediately pivoted to a policy that provides the following to all taxpayers-meaning all individuals, trusts, estates, partnerships, associations, companies or corporations regardless of whether or how much they are affected by COVID-19:

1. For a taxpayer with a Federal income tax return or a Federal income tax payment due on April 15, 2020, the due date for filing and paying is automatically postponed to July 15, 2020, regardless of the size of the payment owed.

2. The taxpayer doesn’t have to file Form 4686 (automatic extensions for individuals) or Form 7004 (certain other automatic extensions) to get the extension.

3. The relief is for (A) Federal income tax payments (including tax payments on self-employment income) and Federal income tax returns due on April 15, 2020 for the person’s 2019 tax year, and (B) Federal estimated income tax payments (including tax payments on self-employment income) due on April 15, 2020 for the person’s 2020 tax year.

4. No extension is provided for the payment or deposit of any other type of Federal tax (e.g. estate or gift taxes) or the filing of any Federal information return.

5. As a result of the return filing and tax payment postponement from April 15, 2020, to July 15, 2020, that period is disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the postponed income tax returns or pay the postponed income taxes. Interest, penalties and additions to tax will begin to accrue again on July 16, 2020.

Favorable treatment for COVID-19 payments from Health Savings Accounts. Health savings accounts (HSAs) have both advantages and disadvantages relative to Flexible Spending Accounts when paying for health expenses with untaxed dollars. One disadvantage is that a qualifying HSA may not reimburse an account beneficiary for medical expenses until those expenses exceed the required deductible levels. But IRS has announced that payments from an HSA that are made to test for or treat COVID-19 don’t affect the status of the account as an HSA (and don’t cause a tax for the account holder) even if the HSA deductible hasn’t been met. Vaccinations continue to be treated as preventative measures that can be paid for without regard to the deductible amount.

Tax credits and a tax exemption to lessen burden of COVID-19 business mandates. On March 18, President Trump signed into law the Families First Coronavirus Response Act (the Act, PL 116-127), which eased the compliance burden on businesses. The Act includes the four tax credits and one tax exemption discussed below.

A. Payroll tax credit for required paid sick leave (the payroll sick leave credit). The Emergency Paid Sick Leave Act (EPSLA) division of the Act generally requires private employers with fewer than 500 employees to provide 80 hours of paid sick time to employees who are unable to work for virus-related reasons (with an administrative exemption for less-than-50-employee businesses that the leave mandate puts in jeopardy). The pay is up to $511 per day with a $5,110 overall limit for an employee directly affected by the virus and up to $200 per day with a $2,000 overall limit for an employee that is a caregiver.

The tax credit corresponding with the EPSLA mandate is a credit against the employer’s 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax). The credit amount generally tracks the $511/$5,110 and $200/$2,000 per-employee limits described above. The credit can be increased by (1) the amount of certain expenses in connection with a qualified health plan if the expenses are excludible from employee income and (2) the employer’s share of the payroll Medicare hospital tax imposed on any payments required under the EPSLA. Credit amounts earned in excess of the employer’s 6.2% Social Security (OASDI) tax (or in excess of the Railroad Retirement tax) are refundable. The credit is electable and includes provisions that prevent double tax benefits (for example, using the same wages to get the benefit of the credit and of the current law employer credit for paid family and medical leave). The credit applies to wages paid in a period (1) beginning on a date determined by IRS that is no later than April 2, 2020 and (2) ending on December 31, 2020.

B. Income tax sick leave credit for the self-employed (self-employed sick leave credit). The Act provides a refundable income tax credit (including against the taxes on self-employment income and net investment income) for sick leave to a self-employed person by treating the self-employed person both as an employer and an employee for credit purposes. Thus, with some limits, the self-employed person is eligible for a sick leave credit to the extent that an employer would earn the payroll sick leave credit if the self-employed person were an employee.

Accordingly, the self-employed person can receive an income tax credit with a maximum value of $5,110 or $2,000 per the payroll sick leave credit. However, those amounts are decreased to the extent that the self-employed person has insufficient self-employment income determined under a formula or to the extent that the self-employed person has received paid sick leave from an employer under the Act. The credit applies to a period (1) beginning on a date determined by the IRS that is no later than April 2, 2020 and (2) ending on December 31, 2020. 

C. Payroll tax credit for required paid family leave (the payroll family leave credit).  The Emergency Family and Medical Leave Expansion Act (EFMLEA) division of the Act requires employers with fewer than 500 employees to provide both paid and unpaid leave (with an administrative exemption for less-than-50-employee businesses that the leave mandate puts in jeopardy). The leave generally is available when an employee must take off to care for the employee’s child under age 18 because of a COVID-19 emergency declared by a federal, state, or local authority that either (1) closes a school or childcare place or (2) makes a childcare provider unavailable. Generally, the first 10 days of leave can be unpaid and then paid leave is required, pegged to the employee’s pay rate and pay hours. However, the paid leave can’t exceed $200 per day and $10,000 in the aggregate per employee.

The tax credit corresponding with the EFMLEA mandate is a credit against the employer’s 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax). The credit generally tracks the $200/$10,000 per employee limits described above. The other important rules for the credit, including its effective period, are the same as those described above for the payroll sick leave credit.

D. Income tax family leave credit for the self-employed (self-employed family leave credit). The Act provides to the self-employed a refundable income tax credit (including against the taxes on self-employment income and net investment income) for family leave similar to the self-employed sick leave credit discussed above. Thus, a self-employed person is treated as both an employer and an employee for purposes of the credit and is eligible for the credit to the extent that an employer would earn the payroll family leave credit if the self-employed person were an employee.

Accordingly, the self-employed person can receive an income tax credit with a maximum value of $10,000 as per the payroll family leave credit. However, under rules similar to those for the self-employed sick leave credit, that amount is decreased to the extent that the self-employed person has insufficient self-employment income determined under a formula or to the extent that the self-employed person has received paid family leave from an employer under the Act. The credit applies to a period (1) beginning on a date determined by IRS that is no later than April 2, 2020 and (2) ending on December 31, 2020. 

E. Exemption for employer’s portion of any Social Security (OASDI) payroll tax or railroad retirement tax arising from required payments. Wages paid as required sick leave payments because of EPSLA or as required family leave payments under EFMLEA aren’t considered wages for purposes of the employer’s 6.2% portion of the Social Security (OASDI) payroll tax or for purposes of the Railroad Retirement tax.

IRS information site. Ongoing information on the IRS and tax legislation response to COVID- 19 can be found at https://www.irs.gov/coronavirus. 

In the interim, please do not hesitate to contact us if you have any questions or we can assist you in any of your estate or business planning legal needs.