2020-03-28

Coronavirus Aid, Relief and Economic Security Act (CARES Act), what it means to you and your business.

CARES ACT

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law on March 27th, 2020. It provides much needed relief to individuals and small businesses affected by the COVID-19 outbreak.

Many businesses will be eligible for loans that will be forgivable. I'm available to assist business owners with deciding which loan's to apply for and assist in filing applications.

SMALL BUSINESS RELIEF

The act provides relief to small businesses via forgivable small business loans, delays of estimated payment and payroll tax payments, student loan payment exclusions, employee retention credits and loss modifications. This in addition to the extension of 2019 income tax filing and payment deadlines to July 15, 2020 already passed earlier this week.

Highlights of these provisions include but are not limited to:

  • Small Business Loans: SBA is providing working capital loans with a maximum interest rate of 4.0% to small businesses affectected by the coronavirus. These loans can be forgiven.  The amount to be forgiven is equal to the sum total of the following costs, paid during the 8 week period beginning on the date of the covered loan origination (not to exceed  the original principal amount)
    • payroll costs
    • interest on mortgage obligations
    • rent
    • utility payments
  • Refundable Payroll Tax Credit: Employers are provided a refundable payroll tax credit of 50% of wages paid to employees during the COVID-19 crisis. This credit is available to employers whose operations were fully or partially susbpended due to a COVID-19 related shutdown order, or whose gross receipts declined by more than 50% when compared to the same quarter in the prior year.
  • Delay of Payment of Employer Payroll Taxes: The employer share of social security tax payments otherwise due, can be deferred over 2 years. 
  • Net Operating Losses (NOL's) : Losses from 2018, 2019 & 2020 can be carried back for 5 years, in addition taxpayers will temporarily be able to offset 100% of taxable income with NOL's.


INDIVIDUAL RELIEF

Individuals will find relief via 2020 recovery rebates, penalty-free retirement distributions, loans from qualified plans, temporary waiver of required minimum distributions, partial above the line charitable contribution deduction and temporary suspension of contribution limitations as well as expansion of unemployment benefits and paid leave for rehired employees. This is in addition to the extension of individual income tax filing and payment deadlines to July 15, 2020 passed earlier this week.

Highlights of the individual provisions include but are not limited to:


  • 2020 Recovery Rebates for Individuals: A rebate of $1200 per individual, ($2400 for married couples filing jointly) plus $500 per qualifying child less than age 17. Payments to be reduced by 5% of 2020 adjusted gross income in excess of $75,000 ($150,000 for joint filers). Taxpayers who qualify as a dependent of another taxpayer are ineligible for this credit.
  • Penalty-free Retirement Distributions: Taxpayers affected by the COVID-19 outbreak, can make penalty free withdrawals of up to $100,000 from their retirement accounts. These withdrawals will still be taxable but taxpayers may include the distribution ratably over a three-year period.
  • Loans from Qualified Plans: For taxpayers affected by the COVID-19 outbreak, the maximum qualified plan loan amount has been doubled to $100,000. The due date for repayment of the loan is delayed one year.
  • RMDS required to be made in 2020 are waived.
  • A $300 cash charitable deduction will be available to taxpayers who do not itemize.
  • the 50% limitation is suspended for cash charitable contributions made in 2020.
  • Expansion of Unemployment Benefits: Unemployment benefits under this bill are temporarily expanded to self-employed, and independent contractors. Provisions include a $600 per week payment increase through the end of July 2020 as well as extension of benefit period by 13 weeks.