Foundational Financial Life Planning

Foundational Financial Life Planning is the first level of financial planning, what they should have taught everyone in school.

Does it feel like 2021 yet?

Does it feel like 2021 yet?

The twists and turns so far make it seem like 2020 is dragging into a second season.

As an American, I’m a little shocked and worried, and I’m musing onhow political disagreements turned into excuses for violence for both sides of the red-blue spectrum.

As a father, I am concerned about the type of world my kids will have to grow up in.

As a financial professional, I know that the politics, protests, and rioting in DC are just one small factor affecting markets.

I honestly don’t know what will happen over the next few weeks, but I can help you understand how it affects you as an investor.

Why did markets surge the day the Capitol was rioted?

While the world watched the craziness in DC with popcorn, markets quietly rallied to new records the same day.1

That’s weird, right?

Well, not really.

I think it boils down to a few things.

  1. Computers and algorithms are dispassionate, executing trades based on the biases programmed in, regardless of the larger world.
  2. Markets don’t always react to short-term ugliness. Instead, they reflect expectations about economic and business growth, plus a healthy dose of investor psychology.
  3. With elections officially at an end, political uncertainty has reduced some.

Personally, I disagree with much of the implementation of the lockdowns, not protecting the vulnerable, shutting down small businesses, and how the economic stimulus bills have been approached. 
But it’s not about my viewpoint, it’s about what the whole market thinks.  I think most investors are looking past the immediate future and hoping that vaccines, increased economic stimulus, and economic growth paint a positive picture of the future. 

The Democrats control the White House and Congress. What does that mean for investors?

If you’re like a lot of people, you might think that your party in power is good for markets and your party out of power is bad.

That makes for a stressful experience every four years, right?

Fortunately, that’s not the case for our markets.  Market are pretty rational and efficient in the long term, especially with respect to politics and government policy.

While businesses and investors generally dislike increased taxes and corporate regulation, the Democrats hold such slim majorities in the House and Senate that it limits their ability to pass many big policy changes.

Also, the Democrats’ immediate agenda is very likely to be focused on fighting the pandemic and passing more stimulus aid, both of which should support stock prices.

Does that mean markets will continue to rally?

Maybe; no guarantees, unfortunately. With all the frothy market activity and rosy expectations about the future, bad news could knock stocks down a peg or two.

A correction is definitely possible, and some strategists think several sectors are in a bubble.

Bottom line, expect more volatility.

Well what comes next?

I wish I could tell you. If somebody tells you they know, then they need a dose of humility or wisdom.

I’m HOPING that the vicious cycle of divisive politics will slow down some after the inauguration, and the politicians can get something done. But, they are usually disappointing, even when it is bipartisan. 

I am optimistic that the light at the end of the tunnel is getting closer, and we can start getting a little bit closer to normal.

I’m proud of what scientists and medical professionals have been able to accomplish in such a short amount of time.

I’m grateful for the folks around me.

I’m still rationally optimistic, and hopeful about the future.  Human innovation is the ultimate resource and we are making great progress in science, medicine, technology, etc and it all makes the world a better place.  

How about you? What’s your take? I’m interested to hear your thoughts.
Email me your thoughts at Daniel@blackswancfp.com
P.S. Tax laws are likely to change under the Biden presidency. We don’t know exactly when they’ll happen or what they’ll look like, but I’ll be in touch when we know more. We will be releasing an Insights guide to the major tax changes.

1 https://www.cnbc.com/2021/01/07/stocks-rally-to-record-highs-traders-on-whats-next-for-markets.html

By blackswanplan, ago

The Psychology of Human Misjudgment, by Charlie Munger

The Psychology of Human Misjudgment is a great speech given by the legendary Charlie Munger. He explains how behavioral psychology can be applied to life, business, and problem-solving.

Here Charlie lays out the 24 Standard Causes of Human Misjudgment, with wit and wisdom.

You can find Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger Here.

“This book is something of a publishing miracle—never advertised, yet year after year selling many thousands of copies from its Internet site.”
– Warren Buffett

By blackswanplan, ago

Navigating Market Uncertainty

Everybody gets affected by uncertainty. It may be different things to different people, but uncertainty can be scary. 

We want to be that safe harbor that you can pull into and make sure everything is ok.  It is part of our responsibility.
You might not need anything changed. Your plan might be perfectly on track.  But sometimes, there are good course correction to be made. 

What we want to do is find the space and time to process the anxiety, to get the monkey off your back.
Often, that is just having a conversation about your plan; the why, what, and how. 

By blackswanplan, ago

CFP Ethics & Standards Overview

Summary of the New Code and Standards: Get a summary of a CFP® professional’s duties under the new Code and Standards.

The Levels of Rules and Requirements: Get an overview of the levels of rules and requirements for CFP® professionals under the new Code and Standards.

The Fiduciary Obligation: Learn about the expanded fiduciary obligation at the core of the new Code and Standards, which requires CFP® professionals to act in the best interest of the client.

Financial Advice: See how financial advice is defined under the new Code and Standards.
Duty of Loyalty: Explore the importance of Duty of Loyalty under the new Code and Standards.

What Is Financial Planning?: Review the definition of financial planning and get up-to-speed on the 3 circumstances where a CFP® professional is required to provide financial planning advice.

Integration Factors: Find out the 5 factors to consider when a CFP® professional who is providing financial advice must also provide financial planning.

By blackswanplan, ago

Basic Human Resources

The 4 Most Basic Financial Planning Elements/ Personal Human Resources

There is an old saying
“Show me your calendar and your checkbook, and I will tell you what is most important in your life.”
Yes, it is wise to be careful where you spend your time and money; but remember, your energy and mind are limited resources too. If your mind fills up with anxiety or distractions, it is hard to be effective in the world.

Financial planning and life planning, as complicated as they can be, ultimately come down to basic human resources. Using these 4 elements the best way you can, with the cards you are dealt. Often we trade time & energy for money, or trade money for a piece of someone’s mind.

It is important to recognize all the resources. Often people find themselves in traps like being very “thrifty”, but not valuing their time enough. E.g. doing something themselves, that would have really been more economical to have someone else do.

Examples of trade-offs from managing personal resources.

  • When we are young we trade most of our time, mind space, and energy for money.
  • When we are in college we spend time and money to develop our mind.
  • When we have small children, we are almost always low on mind space and energy; so we may spend money to have more things done for us.
  • As we grow in our field of work, our mind can bring us more money than our time.
  • As we first retire we have lots of time. If we are lucky, there is a window where we have our health, energy, and money to make the most of that time.
  • When we are very old we may trade all of our money for a little more time.
By blackswanplan, ago

How You Can Use The CARES Act To Help Your Family, Business, Or Nonprofit.

For Individuals & Families

In-Post Shortcuts: For Individuals & Families

Answers to the most common questions:

What exactly should I get and when?​

3 interrelated questions:
What if I can’t go to work or get laid off?
What if one of us gets sick from COVID-19?
What if our childcare is shut down and I can’t work?

What should I do with my stimulus check?

To jump to the Business & Non-Profits section click here.

Answers to the most common questions:

Will I have to pay back the Stimulus money on my 2020 taxes?
No, that is a rumor stared by people that do not know any better.
There are no strings attached, and you will not have to pay it back.
Basically, the U.S. government labeled the stimulus checks as a “tax credit” so that it could use the IRS system to send out the checks.

Should I take a forbearance from my mortgage?
Some mortgage lenders are offering a 90 and even 180 day forbearance.  Forbearance is not forgiveness, and it just extends the length of time to pay off your house. If, and only if, you need the money- then take the forbearance. If you don’t need the money,  it is probably just not worth it.

Are required minimum distributions (RMDs) really suspended?
Yes, but only for 2020. RMDs for all retirement plans that you own or that you inherited RMDs that are due on both April 1, 2020, and December 31, 2020. Any RMDs that were already taken in 2020 (including 2019 RMDs that were withdrawn early in 2020) are eligible for a 60-day indirect rollover. You also have three years to pay their distribution back under these special COVID-19 distribution rules.

Is there a Tax Deadline Extension for IRA contributions?

  • The 2019 Traditional and Roth IRA contribution deadline is now July 15th, 2020.
  • The 2019 SEP contribution deadline is now July 15th, 2020 (or October 15th, 2020 if filing for an extension).
  • The 2019 IRA recharacterization deadline is now July 15th, 2020 (or October 15th, 2020 if filing for an extension or amending your tax return).

Questions from Current College Students & Parents:
Most will not get a stimulus check, and their parents will not get $500 for them either. More here.

Yes, there are personal-finance media-stars recommending a gap year. That might be the right thing for some students, and a well thought out gap year can be a time for great personal growth.
For most families I recommend exploring online classes, still it’s a very personal decision that changes greatly with your exact situation. Many colleges are expecting a reduction in students this fall, and there are many schools that are already in financial trouble. This is also magnified with the problem of families not being able to visit campuses, the way we have done in the past.  So, I do recommend putting deposits at more than one school.

Should I still pay my student loans?
Student loan interest is waived, and all the required payments are suspended until September 30th, 2020.  You need to proactively call them, as not all loan servicers will do this automatically, use the words “coronavirus relief” and they are allowed to give you better options.
*If you were enrolled in public student loans forgiveness before march 13th, these months will still count towards total payments. But you still need to be classified as a full time employee during this time period.  Submitting the documentation for PSLF for this year would be very wise, as loan servicers do not always handle things properly in subsequent years.

Student Loans are a far more complicated type of debt than mortgages. Some great Cares Act information about student loans is available here. As always, contacting a student loan expert pays for itself, many times over. The best ones are a Advanced Education Planner or a Certified Student Loan Planner.

Feel free to save or share any of these cards.

What exactly should I get and when?

Tax Filing status Adjusted Gross Income  Stimulus amount 
Single $75,000 or less $1,200 
Married filing jointly $150,000 or less $2,400 
Head of Household $112,500 or less $1,200 
Dependents under 17
at the end of the tax year		N/A +$500 added to
taxpayer stimulus

  • The first Block of stimulus relief checks were deposited into some bank accounts April 9. 60 million IRS stimulus payments have, or are currently being paid. About half of taxpayers will receive their check within the next two weeks.  It should read something like:”DIRECT DEPOSIT IRS TREAS # TAX REF”
  • Lower earning taxpayers should receive their direct deposits first, with the highest earners receiving payments last. It will be done in income blocks or waves.
    The IRS is expected to begin issuing paper checks about three weeks after the direct deposits are completed, probably April 24 and can issue about 5 million checks per week. It is appropriate that lower earning individuals will get their deposits first. Unfortunately, many of the our most vulnerable citizens are unbanked, and those paper checks may take all summer.
    Yes, you read that right. If you receive checks for tax returns, it may be delayed by 10 to 20 weeks. 
    If you did not file 2018 or 2019 taxes, enter payment info here. 

    Note: The IRS is rolling out a tracking tool called “Get My Payment”, to allow taxpayers to find out the status of their rebate. it is supposed to be ready on April 17.

  • Those on Social Security, Supplemental Security Income, or Veterans Benefits are eligible for a relief check.
  • Tax filing and payment has moved to July 15th but second quarter estimated taxes are still due June 15th as of now.
  • If your income exceeds the thresholds, the amount will be reduced on a sliding scale. Annual AGI income phase out limits: $75,000 to $99,000 individuals / $150,000 to $198,000 married filing jointly.

What if I can't go to work or get laid off?
What if one of us gets sick from COVID-19?
What if our childcare is shut down and I can't work?

Illinois Department of Employment Security: will Expanded Unemployment Benefits under the CARES Act

  • Benefits for those not traditionally eligible; self-employed, independent contractors
  • $600 extra per week for up to four months
  • additional 13 weeks of benefits after state benefits are exhausted
  • IDES will issue further details after implementation

Families First Coronavirus Response Act: through your employer

Paid Sick Leave Credit – up to 80 hours/10 days (sick with COVID-19)

  • Up to $511 per day per employee
  • For Employee who needs to care for someone with COVID-19 or caring for a child because the facility is closed – maximum is $200 up to 10 days/80 hours

Child Care Leave Credit – up to 10 weeks

  • Equal to two-thirds of the employee’s regular pay – capped at $200 per day or $10,000 in the aggregate
  • Unable to work because the school or child care facility is closed

The DOL guidance is here.

Illinois Childcare Expansion: to support essential workers’ child care needs

There is going to be help for Illinois child care: expanded child care options and ease the financial burden of emergency child care centers.

“The state will cover most of the cost of care provided by emergency child care centers and homes. This expansion of eligibility includes those working as nurses and doctors, supporting staff in hospitals, grocery store clerks and food producers.”

When it becomes available the most up to date information will be at these sites:

www2.illinois.gov/sites/OECD/

http://www.dhs.state.il.us/

https://coronavirus.illinois.gov/s/

_______________

Illinois Workers’ Compensation Commission Issues Emergency Amendment that Impacts COVID-19 Front-Line Workers, First Responders

What should I do with my stimulus check?

For some families, there just won’t be many options. Sometimes you just have to do what is necessary now, not what would be best in the long term. Here, I am just trying to pass along some good, long-term, fundamentals to protect and provide for your loved ones. These are written in the order of importance, for most situations.

After your immediate necessities are taken care of, then first:

  1. Fill up your Primary Checking Buffer
    It is a great idea to have 1 month worth of expenses in your checking account. It is a buffer to avoid potential overdrafts.  It helps smooth out a lot of financial wrecks into road bumps.  It is also immediate access in case you need the cash. Cash can often get you better deals than credit cards.

    Tip: Use your credit card for most purchases. Credit cards have better fraud protection than debit cards and don’t give a thief direct access to your money buffer. Just remember to pay it off every month, or better yet auto-pay. 

    and

  2. Keep up on your bills, and make minimum payments on debt 
    Missing payments can rack up fees and hurt your credit score. If money is tight, proactively contact the companies to see if any alternative payment options are available. Banks ave been strongly encouraged by the FDIC to reduce or eliminate fees. Most places are offering leniency with payments, mortgage, utilities, student loans…

    If you have any money left over, then:

  3. Pay off any high-interest debt 
    When we are talking about high interest debt we are talking about anything at 10% or above. Put any extra stimulus money towards high-interest debt that you currently hold, such as credit cards. Paying off even a little high-interest debt can help you reduce your monthly expenses.

    Tip: If you have high-interest Student Loan Debt, then you need to talk to an Advanced Education Planner or a Certified Student Loan Planner.

    If you have any money left over, then:

  4. Grow your emergency fund
    On top of the buffer in your checking account, you need between 3 to 12 months of expenses in a savings account. It needs to be held in a low-risk, immediately available, type of account that yields from 1-2%.  Check savings rates here.

    Tip: It is important not to get into the emotional habit of hoarding money in a savings account. If you don’t invest the amount above your emergency fund somewhere, your money will start to lose real value to inflation.

    Examples: If you work for the federal government, your spouse is a tenured professor, you have no kids at home, and you can both work from home: then you probably only need a 3 month emergency fund. If you are a small business contractor, with a single family income, and you have young kids; then you probably need closer to 12 months worth of expenses on hand.

    If you have any money left over, then:

  5. Pay down any credit or regular debt from 6% to 10% interest rate.
    Any debt left over that is average interest, but is still hurting you. Often, this is revolving debt like: credit cards, home equity lines of credit (HELOC) and personal lines of credit.

    We are not talking about mortgages or student loans, those both need a more nuanced approach. It might soon be the proper time to think about a refinance on home mortgages. 

    The CPI inflation rate averages about 3%. So, if you get a loan at 3% or less, you are borrowing money at a very cheap rate + a little risk. So in some situations, for some people, it is not worth paying off the loan.

    If you have any money left over, then:

  6. Fund your long term buckets
    My favorite bucket, for most clients, is the Roth IRA. It can be used for your kids education expenses, your retirement, and health disasters.
    You have to invest at a level of risk you are comfortable with, and that is a complicated thing best talked about with a CFP® Professional. 
    Setting that aside: globally diversified, low fee, target-dated, index & mutual funds are a great place for someone to begin investing.

    Tip: I usually recommend Betterment to my Pro Bono clients.

    Tip: Now is the best time to do a Roth IRA conversion that I have seen in a very long time.

    and

  7. Help someone or something you value
    Gratitude and community are some of the fundamental elements of feeling safe and happy. That is why it feels so great to help out.
    How could you help your family, neighbors, or friends in need?
    Are there locally-owned small businesses and restaurants you love, who are especially affected by the outbreak?
    Are there charities you value focused on coronavirus aid and relief?

    Tip: Normally, deductions for charitable contributions are limited to 60% of gross income, and excess is carried over to future years. For the 2020 tax year that is raised to 100%
    Also, Up to $300 is deductible above-the-line for taxpayers that do not itemize deductions. So keep track of those cash donations.

If you need a little help, I have doubled my available Pro Bono hours. Just email or use my call calendar to schedule a conversation, it’s the same level of privacy as my paying clients. 
You can get through this, and there is hope.
Daniel L. Bishop
Advice-Only CFP® Professional

For Business & Non-Profits

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has a lot in it. And it has been difficult to decipher: with unclear terms, a lack of document guidance to lenders, daily changes, messy loan forgiveness, a glitchy site unprepared for launch. It has been a difficult couple of weeks for everyone involved.

Fortunately, there is some real help for small businesses and non-profits. This is an overview of what you programs you might want to consider as we are all trying to weather the economic sandstorm. I hope you find it helpful, and find some hope for the future. If you need help understanding anything, or just need to talk to another business owner for a few minutes; feel free to schedule a call, email me, or message me on Linked In or Facebook.
Daniel L. Bishop
Advice-Only CFP® Professional

In-Post Shortcuts: For Business & Non-Profits

Paycheck Protection Program 
-Loan program to cover cost of keeping employees

Small Business Debt Relief Program 
-Debt relief and loan forgiveness to keep up with payments on SBA loans

Disaster Relief & EIDL (Economic Injury Disaster Loans)
-Quick loan advances of cash to keep the doors open
-Useful if PPP funds are exhausted

Families First Coronavirus Response Act
-Paid sick leave, family leave, and childcare credits

Employee Retention Tax Credit (ERTC) & Deferral of payment of Employer Payroll Taxes
-Deferral of up to 50% of Taxes…
-Not available for those using Paycheck Protection Program

Large Business Loss Tax Tactic 

Useful Documents, Tool, & Links for Additional Reading

Coronavirus Air, Relief, and Economic Security Act (CARES Act): The CARES ACT

  • Federally guaranteed SBA loans to businesses with 500 or fewer employees
  • Application process ends on June 30, 2020

For those of you who did not get to complete your PPP loans, please see the resources below. These online lenders are taking applications now:

Kabbage – https://www.kabbage.com/paycheck-protection-program-loans/
PayPal – https://www.loanbuilder.com/ppp-loan-application
Square – https://squareup.com/us/en/l/sba-ppp-loans
Intuit – https://quickbooks.intuit.com/…/paycheck-protection-program/

The SBA has a website that tracks which banks are still accepting applications, but it’s user-reported and a few days outdated:
https://www.covidloantracker.com/resources

——————————————————-
Paycheck Protection Program: Forgiveness of up to 8 weeks of payroll based on employee retention and salary levels 

  • Loans are available through June 30, 2020
  • ON April 10, 2020: 1099, independent contractors, and self-employed individuals can apply for and receive loans to cover their payroll
  • Focus period of time from February 15, 2020 to June 30, 2020
  • Non-profits, Churches, and any other 501c3 organization that does not receive Medicaid is also eligible
  • Separate from the SBA Disaster Relief Fund 
  • Only 1 PPP Loan per entity

Loan funds can be used to cover the following expenses: 75% for payroll, up to 25% of the loan on other valid expenses

  • Salary or wages, payments of a cash tip
  • Vacation, parental, family, medical and sick leave
  • Health & retirement insurance benefits 
  • State and local taxes 
  • Mortgage, rent payments, utilities 
  • Interest on any other debt obligations that were incurred before the loan period
  • Limited up to $100k annual Salary/wage for each employee 

The loan amount shall be the lesser of the following: 

  • $10,000,000  OR
  • Total average monthly payroll costs for the preceding 12 months (March 2019 to February 2020) multiplied by 2.5

Notes on actions:

  • ! Good idea to open separate bank account only for PPP
  • Lenders likely current banker
  • No loan payments under this program are due for one year
  • No fees are included in the loan
  • Your company’s expenses for the eight-week period after the origination of the loan will be analyzed
  • Businesses that let employees go before accepting the loan will not be subject to penalties
  • Rehire employees after accepting the loan, can receive additional credit to cover wages
  • Unemployment extended for laid-off staff: based on their date of filing unemployment
  • Good Faith Certification: Support ongoing operations OR  Funds used to retain workers and maintain payroll or make mortgage, lease, and utility payments

 Loan Forgiveness

  • No personal risk for business owners or board members 
  • Partially of fully forgiven – at least 75% of the loan must go toward payroll costs to be fully converted into a “forgiveness grant”
  • Portion of the loan used to for approved cost forgiven, dollar for dollar
  • Normal operating expenses like marketing, admin, travel… are not included
  • ! Amount that is forgiven will be reduced for those that lay off employees during the first eight weeks following the loan
  • ! Companies that reduce wages of employees who make less than $100,000 per year by 25 percent or more will also have the forgivable amount reduced by the amount of the pay cut

Calculation of Loan Forgiveness & Full-Time Equivalent Employee (FTE) 

  • They want you to have equal to or more employees from February. 15, 2020, to June 30, 2020, as you did last year from February 15, 2019, to June 30, 2019
  • Average FTE from: February 15, 2020-June 30, 2020 Divided by February 15, 2019-June 30, 2019 = Percentage of loan forgivable
  • Every dollar your company spent on payroll, utilities, rent, or interest on mortgage debt will be added together. That amount will be forgiven, up to the total amount your company borrowed through the program
  • Funds not forgiven have a 10 year loan maturity

What Lenders are Requiring to Apply: 

Latest tax return, 6 months of bank statements, Profit & Loss for 2019 to 2020 current, Voided check of where to deposit loan, Drivers License 

Financial Document Examples:

  • 2019 IRS Quarterly 940, 941 or 944 payroll tax reports or Schedule C (line 31)  or Schedule K-1 
  • Last 12 months of Payroll Reports beginning with your last payroll date and going backwards 12 months (e.g. gross wages for each employee, paid time off for each employee, vacation pay for each employee) 
  • Total of 1099s for 2019 for independent contractors that would otherwise be an employee of your business 
  • Documentation showing total of all health insurance premiums and retirement benefits paid by the Company Owner
  • Average Monthly Payroll is determined by the lending bank for Sole Proprietors, Self-Employed Individuals & Seasonal Businesses

Loan Terms 

  • Loan Amount – 2.5 times Average Monthly Payroll
  • Interest Rate of 1.0% 
  • Maturity 2 years — 1st payment deferred for 6 months 
  • 100% Guaranteed by SBA 
  • No Collateral — No Personal Guarantees 
  • No borrower or lender fees payable to SBA

SBA Business Loan Program Temporary Changes; Paycheck Protection Program

      Small Business Debt Relief – first come first serve: relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.

      Debt Relief:

      • Existing borrowers can defer payments of principal, interest, and fees for up to six months
      • Possible extensions, but not more than one year 
      • Available to new borrowers who take out loans within six months of the date bill was signed into law
      • SBA will pay 6 months of SBA Loan payments on Certain SBA Loans
      • SBA Express Bridge Loans
        Allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork
      • SBA 7(a) Program 
        Regular SBA Loan Program Through Banks & SBA Approved Lenders,  
        will Become a Lower Priority Behind the Paycheck Protection Loan Program

        Disaster Relief Loans:  Economic Injury Disaster Loans & Emergency Economic Injury Grants

        Apply for Federally approved SBA loans for COVID-19 here: SBA Disaster Loan Assistance  OR  SBA Coronavirus COVID-19  
        Due to Current Increased Volume, the SBA Website is Overwhelmed & Processing Time Could Be Weeks or even Months.

        • Up to $2 million with low interest rates
        • Not Eligible for “Loan Forgiveness” but Eligible for Emergency Economic Injury Grants
        • May be used with the PPP loan, but not stacking
        • Funds can come within 3 days of successful application
        • May be used to: to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments
        • Economic Injury Disaster Loans are also available to residents in declared disaster areas. To view the full list of disasters, click here

        Emergency Economic Injury Grants 

        • $10,000 Grants for Small Businesses Applying for an EIDL Loan. 
        • Limited to the Lesser of $1,000 per Employee or $10,000. 

        Families First Coronavirus Response Act:

        Paid Sick Leave Credit – up to 80 hours/10 days (sick with COVID-19)

        • Up to $511 per day per employee
        • For Employee who needs to care for someone with COVID-19 or caring for a child because the facility is closed – maximum is $200 up to 10 days/80 hours

        Child Care Leave Credit – up to 10 weeks

        • Equal to two-thirds of the employee’s regular pay – capped at $200 per day or $10,000 in the aggregate
        • Unable to work because the school or child care facility is closed

        How to get the credits (more guidance should be coming soon)

        • Retain an amount of the payroll taxes equal to the amount paid, instead of depositing to the IRS
        • The payroll taxes include withheld federal income taxes, FICA and Employer’s FICA

        Employee Retention Tax Credit (ERTC):  Deferral of up to 50% of Taxes

        Not available to employers receiving assistance through the Paycheck
        Protection Program.

        • Refundable payroll tax up to 50% of wages paid from March 13 to Dec 31 2020
        • Maximum credit is $5,000 per employee / $10,000 wages paid per employee
        • Must have had shutdown order OR period of significant decline in gross receipts (50% decline from previous year)
        • More than 100 employees, ERTC applies only to who are not providing services

        Delay of Payment of Employer Payroll Taxes

        Not available to employers receiving assistance through the Paycheck
        Protection Program.

        • Allow taxpayers to defer paying the employer portion of certain payroll
          taxes through the end of 2020
        • Deferred amounts due in two equal installments, end of 2021, end of 2022
        • Deferrable taxes include: employer portion of FICA taxes and half of SECA tax
          liability.

        Large Business Loss Tax Tactic 

        If you have a net operating loss of 100k in 2019 or 2020, you can carry back those losses for 5 years. You can amend the last 5 tax years to get a refund of those previously paid taxes. You will need to track and apply post-CARES Act NOLs (Net Operating Loss) separately from older NOLs.

        Talk to both your CFP and your CPA about this. No, it is not good enough to have one of them. They work better as the collaborating core of your financial team.

        Note Farming losses are only a two-year carry back, with opt-out
        election, retained.

        Useful Documents, Tools, & Links for Additional Reading

        Tools

        Full-Time Equivalent calculator to convert part-time employee hours into full-time numbers

        Useful Docs & Websites

        The CARES ACT    The CARES ACT ACTUAL PDF

        Illinois Unemployment Benefits

        Paid Leave Requirements

        Paycheck Protection Loan Program (Partially Forgivable)

        SBA provides low-interest disaster loans

        Deferral of payroll tax payments up to 50% of payroll taxes through 2020.

        Chamber of Commerce CORONA Virus Emergency Loans Small Business Guide and Checklist.

        Department of Labor: COVID-19 and the American Workplace
        Posters, fact-sheets, etc. 

        COVID-19 Workplace Impact and Employer FAQs: The Families First Coronavirus Response Act

        Families First Coronavirus Response Act: Questions and Answers

        Congress Reaches Agreement On A Coronavirus Relief Package: Tax Aspects Of The CARES Act

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