By: Chris J. Roe, CPA/PFS
Now what? You did not get a Paycheck Protection Program (“PPP”) Loan.
You are an independent contract medical professional or own your own practice and your PPP application has not been funded. Or, perhaps your bank shut down the application process. Now, you are wondering is there other benefits to help through these rough economic times. Well, you are not out of luck.
There are other benefits the Coronavirus Aid, Relief, and Economic Security (CARES) Act put into effect besides the PPP. Below, we discuss three key benefits that may help.
The CARES Act creates a new temporary federal program called Pandemic Unemployment Assistance (PUA). Under this program, unemployment benefits are provided up to 39 weeks to individuals not normally eligible for regular unemployment compensation or extended benefits. Additionally, the CARES Act provides extra money to the weekly benefit provided by a state. 
Under PUA, covered individuals include the self-employed (e.g. independent contractors, sole proprietors), those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits.
Your unemployment eligibility is determined by each state. Check directly with your state’s unemployment office to learn eligibility and how to file.
As a quick reference, below are links to a few state websites:
Florida – https://connect.myflorida.com/
Georgia – https://dol.georgia.gov/
Maryland – https://www.dllr.state.md.us/employment/unemployment.shtml
Michigan – https://www.michigan.gov/leo/
Ohio – https://unemployment.cmt.ohio.gov/cmtview/
Pennsylvania – https://www.uc.pa.gov/Pages/default.aspx
Texas – https://www.twc.texas.gov/jobseekers/unemployment-benefits-services
Virginia – https://www.michigan.gov/leo/
West Virginia – https://workforcewv.org/unemployment
Employee Retention Credit
The CARES Act creates a new credit to encourage medical practices to keep employees on payroll. The credit is a fully refundable credit against employment taxes.
As a medical practice, the credit is available, but if you received a PPP loan or an Economic Injury Disaster Loan (“EIDL”), you lose the ability to claim this credit. Moreover, if your medical practice or you are treated as self-employed or a sole proprietor, your self-employment taxes are not eligible for this credit.
Your practice qualifies to claim the credit if either:
- The practice is fully or partially suspended by government order due to COVID-19 during the any calendar quarter in 2020; or
- The practice is experiencing a significant decline in revenue versus the same quarter in 2019. A significant revenue decline is defined as a drop of more than 50% compared to the same calendar quarter in the previous year.
If the medical practice qualifies because it shut down, it continues to qualify until the medical practice experiences a quarter in which it is not fully or partially shut down. In contrast, if the medical practice qualifies because gross revenue declines 60%; then, the practice continues to qualify until revenue increases above 60% of a comparable calendar quarter in 2019.
The credit amount is 50% of qualifying wages paid up to $10,000. Thus, the maximum credit attributable to any single employee is $5,000 (50% X $10,000). Wages paid after March 12, 2020, and before January 1, 2021, are credit eligible . Also, wages include a portion of employee health care cost. Qualifying wages are based on your medical practice’s average 2019 employee numbers.
For most medical practices, the credit is based on wages paid to all employees, regardless if they worked or not. But, if your practice is large (employs over 100 people), the credit is based on wages paid to employees who did not work during the calendar quarter. This is great and my medical practice qualifies, but how do I claim the credit.
As an employer, your practice gets reimbursed through reducing, by the amount of the credit, your required payroll tax deposits withheld from employees’ pay. Your practice reports total qualified wages and related health insurance costs on its quarterly employment tax returns beginning with the 2020 second quarter. Should your employment tax deposits not cover the entire credit, your practice may seek an advance refund by completing and submitting IRS Form 7200.
Payroll Tax Deferral Opportunity
The CARES Act allows a medical practice to defer payroll taxes incurred through the end of 2020. The medical practice can defer half of the remaining 2020 payroll taxes until December 31, 2021 and the other half can be deferred to December 31, 2022.
While the Employee Retention Credit is not available if you receive EIDL and/or PPP loan, the payroll tax deferral opportunity is available if you receive the loans, but is lost if you receive any PPP loan forgiveness. Furthermore, this option is available to self-employed practitioners.
Self-employed practitioners can defer the employer portion (half) of self-employment taxes. When self-employed, 50% of self-employment taxes are due as normal, 25% due by December 31, 2021 and the final 25% by December 31, 2022.
Medical practices, including self-employed practitioners, who do not have loans forgiven under the PPP program, are able to combine payroll deferral benefits with other relief. For example, you may get an EIDL loan and defer the payroll taxes.
Should you need any help or want to chat. Please reach out to us. We are here to help.
2020 All Rights Reserved. This content is developed from sources believed to be providing accurate information, and provided by Rx Wealth Advisors, LLC for general informational purposes only. It may not be used for the purpose of avoiding any federal tax penalties and in no way is meant to provide specific tax, legal or financial advice. Please consult legal, financial or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any financial advice or investment security.
 Section 2102 of the CARES Act
 Section 2104 of the CARES Act
 https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-medical practicees-financially-impacted-by-covid-19
 Section 2302 of the CARES Act