Currently the world is attempting to maintain, control and defeat COVID-19 which is the official name for a new version of the Corona virus. The World Health Organization (WHO) has declared it a pandemic. As you see, this is causing financial challenges for many people and businesses.
To help with this unexpected pandemic, the US Senate has passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The US House of Representatives also approved it on March 27th and President Trump has signed it. The cost of this ACT is $2 trillion dollars.
Let’s look at this ACT and see how it can impact people and businesses:
• Cash payments of up to $1,200 for singles, $1,200 for heads of households and $2,400 for married couples filing jointly — plus $500 per qualifying child — subject to income-based phaseouts starting at $75,000, $122,500 and $150,000, respectively
• Expansion of unemployment benefits, including for self-employed and gig-economy workers
• Waiver of the 10% penalty on COVID-19-related early distributions from IRAs, 401(k)s and certain other retirement plans
• Waiver of required minimum distribution rules for IRAs, 401(k)s and certain other retirement plans
• Extension of federal tax filing deadlines, tax payments and for making contributions
• Expansion of charitable contribution tax deductions
Businesses and other employers
• Retention tax credit for eligible employers that continue to pay employee wages while their operations are fully or partially suspended as a result of certain COVID-19-related government orders
• Deferral of the employer portion of payments of certain payroll taxes
• Modification of net operating loss (NOL) and limitation on losses rules
• Modification of the deduction limitation on business interest
• Qualified improvement property technical correction, allowing qualifying interior improvements of buildings to be immediately expensed rather than depreciated over 15 years
• Expansion of the ways the Small Business Administration (SBA) can help small businesses
There is much more to the ACT and what it provides. You should always consult with your tax advisor on how this impacts you personally and professionally.