I hope you are all safe and healthy. I’m feeling overwhelmed and impotent, wondering what I can do to help during the coronavirus crisis.
Today’s post shares some information from my accountant and my own research about the newly enacted economic relief law in the United States, the Coronavirus Aid, Relief and Economic Security (CARES) Act. Many thanks to my incredible accountant for rallying this information for quickly!
Please feel free to share the following!
Individual Tax Relief Provisions
Of note for individuals regarding the tax relief provisions of the CARES Act include:
- Individual recovery rebate/credit
- $1,200 for eligible individuals, $500 for each qualifying child
- Phased out beginning at adjusted gross income (AGI) in excess of: (1) $150,000 for a joint return, (2) $112,500 for a head of household, and (3) $75,000 for all other taxpayers
- If an individual hasn’t yet filed a 2019 income tax return, IRS will determine the amount of the rebate using information from the taxpayer’s 2018 return
- No 10% additional tax for coronavirus-related retirement plan distributions
- Subject to $100,000 limitation
- Distribution can be contributed back to the retirement plan tax-free at any time during the three-year period beginning on the day after the date on which such distribution was received
- Distribution can be included in income over three years
- Required minimum distribution (RMD) requirement for retirement accounts waived for 2020
- Tax-excluded education payments by an employer temporarily include student loan repayments
Business Tax Relief Provisions
Of note for businesses regarding the tax relief provisions of the CARES Act include:
- Employee retention credit for employers
- Up to $5,000 per employee; not available if receiving Small Business Interruption Loans
- Delay of payment of employer payroll taxes
- Delay 2020 payments of employer payroll tax to 2021 and 2022
- Modification of rules relating to net operating loss (NOL) carrybacks
- NOLs can now be carried back five years
- Forgiveness for certain SBA-guaranteed loans
Paycheck Protection Program for Small Businesses
The Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses (typically 500 or fewer employees) to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be able to make these loans once they are approved and enrolled in the program.
You should consult your lender to check if it is participating. All PPP loans will have the same terms regardless of lender or borrower. Check this list of SBA participating lenders.
Vox also has a great guide to the PPP application process.
This is a stressful and confusing time for all of us, and I hope this helps ease some of the uncertainty regarding the stimulus package. I highly recommend your contact your lawyer or accountant for more information if needed.
Please feel free to share this information!
Merci for reading and please subscribe and share!
À votre santé,
Disclaimer: This post contains information only and does not constitute legal or financial advice, nor does it create an attorney-client relationship. For help understanding the CARES Act or applying for a loan, please contact your lender, lawyer, or accountant.