The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by President Trump on March 27th. The Act is intended to provide wide ranging relief to individuals and businesses impacted by the Covid-19 pandemic. A summary of what it provides for individuals and businesses is outlined below.
CARES Act Relief For Individuals
- Direct payments to Americans – Subject to income thresholds, individuals will receive $1,200 per adult and $500 per child. For single filers, the amount is reduced for income levels above $75,000 and eliminated above $99,000. For married filers, the amount is reduced for income levels above $150,000 and eliminated above $198,000. Payments will be based on an individual or couple's most recent tax filing.
- Required minimum distribution for IRA’s and retirement accounts are suspended for 2020.
- Waiver of the 10% penalty for early withdrawals from IRA’s and retirement accounts.
- 401(k) loan limits are increased from $50,000 to $100,000 or half of the vested account value, whichever is less.
- Individuals filing an unemployment claim will receive an additional $600 per week for 4 months in addition to state-provided unemployment benefits.
CARES Act Relief For Business
- Employers can delay payment of their portion of payroll taxes due for 2020 until 2021.
- The 80% rule on net operating losses is lifted and losses can be carried back 5 years.
- The interest expense deduction limitation is increased from 30% to 50% for tax years 2019 and 2020.
- The SBA’s 7(a) loan program is expanded to include the Paycheck Protection Program, which will provide forgivable loans to small businesses that meet certain requirements.
- Debt relief and deferment is offered for businesses with existing SBA loans.
- Emergency Grants of $10,000 are available for applicants of Economic Injury Disaster Loans.
We will be providing more detailed information on the various relief options specified above as we work to move forward during this challenging time. If you have any questions about these relief options or need assistance evaluating the options that are available to you, please contact our firm.