So I called the Internal Revenue Service yesterday. I was saving that as a last resort, mostly in anticipation of a major hassle, but while I am not much further along, it turned out to be a much smoother process than I anticipated.
Back in March, Congress made a couple of weird decisions. Hard to believe, I know, but it happened. First, Congress decided that workers ought not to be penalized by virus restrictions, so their employers should pay for sick and family leave as it pertained to coronavirus.
Congress further figured, incorrectly (probably to no one’s surprise), that every single employer with more than 500 employees already had a sick leave policy that covers two weeks and a family leave policy that pays up to 12 weeks. So it focused all its requirements on employers with fewer than 500 employees as it mandated the employer would pay for up to two weeks at full pay and family leave for up to 12 weeks at two-thirds pay.
After mandating this, Congress then decided that might be onerous on these smaller businesses. Ya think?
The Labor Department announced that companies with fewer than 50 employees could opt out, simply by writing a note and storing it in their own files that providing this leave would be too onerous a burden. Which it certainly would be for Pat’s Screen Printing, where we offer three sick days a year and one to two weeks’ vacation, depending on how long you’ve been with the company. I haven’t done much research, but even these limited benefits don’t seem to be offered by a lot of my peers on Main Street.
So I could have written a note, or just completely ignored the program, since I doubt a single member of the Pat’s staff was aware of any of this, but in my quest to find information it turned out that Congress additionally said, you will do this, but we will pay for it.
Why Congress has to back into everything I don’t know, and the instructions were so cloudy that I’ve read them over, backward, forward, under, around — and I’m still not sure what you do when. Neither, it turns out, is the IRS.
Since this credit barely gets mentioned, there were many times where I wondered if maybe I was making the entire thing up, even as I was withholding money from the tax payment I make to the IRS every month as a means of taking this tax credit.
Pat’s paid sick leave to employees who were banned from coming to work by county fiat and those who called the hotline with symptoms and were told to stay home. Family leave went to Vann, whose daughter got locked out of daycare. Covering all these expenses would be problematic in the best of years; this year it could have proved lethal.
As you likely are aware, the federal government has your employer withhold taxes from your paycheck, for Social Security, Medicare and general tax revenue. You may be less aware that your employer matches your Social Security and Medicare payments dollar for dollar. All of this money is supposed to be remitted by the employer before the 15th of every month.
Unless the employer is taking FFCRA (Families First Coronavirus Something Something) credits. Then there is a very complex formula — more complex, it turns out, than I thought — by which the employer can keep some or (I think) all of that remittance. After studying all the information I could find, I just kept my entire payment for April.
Some of that was intended to be for a different credit as well, but I still — two and a half months later — have not heard anything from the IRS about it, so I backpedaled and applied for another assistance program and paid back the overage in my May payroll taxes.
Now it is time for the June payment, and I finally have a revised copy of the 941, the form I use to report all these payments after I’ve made them. I used this to see if I’d figured things out correctly so that I could make any necessary adjustments on my June payment (due July 15), figuring/hoping that as long as they get the money due them, the IRS would not be too mad if I didn’t get it in the correct month.
The good news is that generally yes, I did know what I was doing. Score one for me! It turns out I didn’t have to pay the employer share of Social Security on this, and I still am not sure where it said that, but it’s another couple hundred dollars in Pat’s pockets, so I’m not arguing.
I had surmised — correctly, it turns out — that I didn’t have to pay the employer share of Medicare, but the IRS put that in a different place on the newly-revised form 941, so they had me worried until I got to page 2 of a now three-page form.
I got everything to work out, all my math made sense, and life was good . . . until I ran up against non-refundable/refundable tax credits. And while my math is all correct and matches everywhere it should (again, score one for me!), the IRS wants my total deposits to match Line 12 rather than Line 13G, which put me too far in the weeds to figure this out myself.
I tried looking on online, and even articles for laymen were in obtuse IRSese, and rather than saying how the types work together, the articles were doing the IRS equivalent of “mansplaining,” telling me a non-refundable credit is one where you don’t get any money back, while a refundable credit allows money to return to you.
For instance (to mansplain), if you owed the IRS $3,000 and had a non-refundable credit of $5,000, you wouldn’t owe the $3,000, but that’s all you get. If the credit were refundable, you wouldn’t pay the $3,000 and the IRS would send you a check for $2,000.
So I get that, but not when the non-refundable and refundable credits are really both out of the same pot and featured on the same form. If I remit money and then wait and wait and wait for the IRS to never send me a check to refund some of what I just paid them — it doesn’t make sense, so of course that’s probably what the IRS intends to do.
But the agent who called me last night knew less about the new 941 than I did.
Yes, I said “called me”: instead of making me wait on the line for 30-60 minutes for the next available agent, the IRS offered to call me back (in 38 minutes, they said, which is pretty much when the phone rang).
While the agent who called (at 5:30 the day before a holiday) was pleasant and professional, as they generally are, she was clearly not terribly versed on the new 941. But she didn’t try to hide that, just kept looking through her directives and information, and found a help line set up specifically for the 941.
It was only then I realized how braced this poor woman was to be screamed at, because you could hear relief flood her voice when I was happy to learn I would be able to call someone who (hopefully) will know exactly what I’m saying when I ask about Lines 12 and 13G.
We wished each other a happy Fourth and hung up. I still have to see if the hotline is actually going to work, and will NOT be enthused if I have to send the IRS money only to wait for them to send some of it back to me, but on the whole I figured out the world’s most convoluted tax credit all by myself, and I’m feeling darn good about it. Go me!