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Tax implications of $1.9 trillion COVID-19 relief package

EY Global Vice Chair for Tax Kate Barton joins the Yahoo Finance Live panel to discuss the long-term impact of COVID-19 on corporations.

Video Transcript

ADAM SHAPIRO: All right, it's not quite due. April 15th is still several weeks away, but tax season is upon us. So let's talk about what's going to happen with taxes, especially now that the House is about to pass that $1.9 trillion COVID relief bill. Kate Barton is EY's global vice chair for tax. She joins us now. We appreciate it. And in the different stimulus bills and the different legislation that's coming out of Washington, there's all kinds of goodies. I'm not talking about $450 billion in stimulus checks. I'm talking about credits for children. So on the individual front, let's go there first. Parents, get ready because there are some changes a-comin', right?

KATE BARTON: Yes, yes, it is, Adam. There's some really good stuff in here. So hopefully, it goes forward this week. So you mentioned the $1,400 payment to individuals, so most Americans will get that. But then there's some really much bigger child care credits, as well as just credits for having children. And so, both taking care of children and elders, which I think is a big issue for a lot of individuals. You can get up to $4,000. And then just for having children, $3,000, up from $2,000. So, there's a lot of complexity on how you get this. But this bill really has a lot of provisions in it to try to get to folks that really need this money.

JEN ROGERS: One thing that a lot of people have been thinking about is they spent time in different states during the pandemic. And some people went to Wyoming or Florida where there's no state tax from New York. And they're thinking maybe this will be able to play in their favor. Is that the case? Like, how do people have to look at this state arbitrage?

KATE BARTON: It's really important, Jen, that that be taken into account. So a lot of people this year will have dual filing. So they'll have multistate filing. And in some instances, some countries actually tried to get the remote worker to come. So places like Bermuda, Barbados. You can imagine the individual has to figure out how they file in their home state, as well as their second state, if you will, a second country, where they might have worked from.

But then there are also unintended corporate tax consequences to that as well. And you'd be surprised how many companies right now are scrambling to figure out where are their workers, and have they created unintended tax consequences for the corporation and have caused the corporation maybe to file in more states or in more countries than they had originally anticipated? So it's a big issue on companies' minds, as well as employees.

ADAM SHAPIRO: All right, the taxes are high in New York City, but I'm glad we stayed. Let me ask you about this because I see a lot of empty storefronts. A lot of businesses got PPP loans. What happens to those businesses that got the loans? Where do they stand at tax season?

KATE BARTON: You know, there's a lot of complexity because in some cases, those businesses have to disclose that on their tax returns. The good news is in this America's rescue plan as well, there are more moneys targeted for certain industries. And so, you know, navigating this latest bill is also going to be something that companies have to address. So there's more PPP money. So if that's something that corporations want to avail themselves, they can do that.

One of the nice provisions in this bill is actually a community navigator, because one of the complexities is, whether or not the company has the financial wherewithal to figure out how to tap into these funds. So I thought that was a provision that folks might want to hear more about, that there's actually going to be more in the local communities to help companies navigate some of this stimulus funds that are, in fact, available. So targeted money for industries that really need it.

JEN ROGERS: I'm wondering if you're somebody who lost your job or you lost your business. What does that mean for your tax year?

KATE BARTON: So there's a lot there. I mean, first of all, you want to make sure that you are getting the aid that you're eligible for. So in this relief bill, there'll be more unemployment funds for people that had lost their jobs. So another $300 up through September is what's contemplated. And so you have to make sure you're still filing and disclosing that. But again, that money is available. For businesses also that have shuttered, there's some funding out there for that, and again, a lot of very targeted funding. And so navigating this new bill and making sure that you're taking full advantage of it is really, really critical.

ADAM SHAPIRO: And the bill is, what, 682 pages, we got to say thank you to the experts who have to read that bill to figure out what they're going to do with all of our taxes, and you are one of them. Kate Barton, EY's global vice chair for tax, you got a lot of reading ahead of you, but we are grateful.