CARES Act: What it means to you
We understand this is a confusing and difficult time for many. We are here to help filter through the mass amount of information and share highlights that are relevant to you and your life. Here are some of the key parts of the recently passed stimulus bill that you may be interested in:
General: Some money may be coming your way
- Individuals entitled to receive $1200, Joint filers $2400
- $500 for each qualifying child (16 or under)
- Rebate amounts reduced/eliminated if income exceeds $150k joint filers, $112.5k head of household, $75k everyone else; for every $100 over threshold $5 of rebate is lost down to nothing
- Numbers are based on AGI from 2019 return or if that hasn’t yet been filed 2018
- Payments to be direct deposited to account last authorized for tax refund
- Within 15 days of payment being sent, IRS will mail notice stating how much it was for and where it was sent to
- Remember through all this to keep your privacy top of mind. Scams are running rampant; do not release any of your personal information to anyone who calls or emails you claiming to be affiliated with the stimulus relief package.
Retirement accounts: Your obligations have lessened and your options have increased
- RMDs waived for 2020
- New exception to 10% early distribution penalty from retirement accounts
- Can be up to $100k, must be taken in 2020, by default is spread over three years unless you elect to include it all in 2020
- To be eligible, must be diagnosed with COVID-19 or have spouse or dependent diagnosed or have experienced adverse financial consequences as a result of being quarantined, furloughed, laid off, reduced hours, unable to work because of childcare issues, and similar reasons
- Individual has up to three years to repay amount as qualified rollover contribution
- Loans from retirement plans allowed up to $100k; may be for up to present value of participant’s account; loan payments due from enactment until 12/31/2020 can be delayed for up to one year
Charitable: Your dollar may go further
- New above the line deduction for certain taxpayers who make charitable contributions of up to $300
- Taxpayers who don’t itemize their federal return will be able to deduct up to $300
- Contribution must be in cash and can’t be used to fund DAF or 509(a)(3) supporting organization
Students: You have some time to breathe
- Federal student loan payments are suspended through 9/30/2020; during this time no interest will accrue and involuntarily collections are suspended; suspended months count toward loan forgiveness programs
- This semester is excluded from lifetime limit on subsidized loans or Pell grants if students drop semester due to COVID-19
- For 2020 only, employers can pay up to $5250 of an employee’s student debt without inclusion in employee’s income
Read The CARES Act: Individual for additional information
Business owners: You're still independent but you're not alone
- Employee retention credit for business owners
- Must have had operations fully or partially suspended due to orders from appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19
- Must have gross revenue for this quarter at less than 50% of gross revenue in same quarter last year
- Once credit is triggered, it remains until gross revenue exceeds 80% of same quarter in prior year
- Credit is worth up to 50% of qualified wages paid to each employee, and goes toward employment taxes (half of which can be deferred until 12/31/2021 and the other half until 12/31/2022)
- NOLs from 2018-2020 can be carried back up to five years and can fully offset income Various loan options
- Paycheck Protection Program Loan: assists with making payroll
- Economic Injury Disaster Loans: allow for advances of up to $10,000
- U.S. Treasury's Exchange Stabilization Fund loans: help to offset decreased revenue and keep people working
- Read The CARES Act: Small Businesses for more information
Please contact us if you would like to discuss this further or if we can be of help in any way
