SYNOPSIS OF THE CARES ACT
- April 3, 2020
- David Greene
- Comments Off on SYNOPSIS OF THE CARES ACT
The Coronavirus Aid, Relied and Economic Security (CARES) Act offers wide ranging financial relief for individuals and small business alike, but many details of how the act will be administered are still being decided.
Some of the main areas of relief for individuals are:
- A $1,200 (single) or $2,400 (couple) stimulus check, which is based on your 2018 tax return and which will be sent to taxpayers whose Adjusted Gross Income (AGI) is less than $75,000. Those who earned between $75,000 and $100,000 will get lesser amounts graduated downward through that range. A $500 check will be provided for children under the age of 17.
- Distributions from Retirement Accounts will be penalty free for those impacted by the Corona Virus.You will still owe taxes on the amount withdrawn, but this may be spread over three years.
- Waiver of the Required Minimum Distribution (RMD) from qualified plans.
- For 2020, cash Charitable Contributions can be deducted up to 100% of AGI.
- Expansion of Unemployment Insurance benefits.
- Forbearance of mortgage payments in certain situations.
- Required payments on federally funded student loans are suspended through September 30, 2020.
Relief for small businesses:
- The Payroll Protection Program (PPP) provides SBA loans for small businesses with less than 500 employees up to ten million dollars. These loans may be forgivable up to $10,000 if certain requirements are met. They must be used for the listed purposes by June 30. They must be repaid within two years. These loans will be handled through banks and other lending institutions. You may borrow 2.5 times your average payroll as calculated using the past twelve months.
- The Economic Injury Disaster Loans (EIDL) program provides loans to help distressed companies and individuals and may be used for any purpose related to COVID. They may be repaid over 30 years. There is no forgiveness provision for these loans. Loan proceeds must be used by December 31, 2020. You may apply for both of these loans as long as they are used for different purposes. Self-employed people and S-Corps may apply for these loans.
Please contact your banking representative for application details.
- If certain criteria are met, up to 50% of payroll taxes can be forgiven.
- Can delay payment of payroll tax for two years.
There are many other provisions in the Act and are too numerous to list here. If you have a particular problem or concern we will be happy to discuss it with you.