On Friday, March 27, 2020, the President signed the CARES Act into law. Here is a look at the highlights of this $2 Trillion relief package:
Stimulus Payments to Individuals
Up to $1,200 for individuals (phase-out begins at $75,000)
Up to $2,400 for couples (phase-out beginnings at $150,000)
$500 per child
Based on 2019 or 2018 tax return
Stimulus payments are not taxable income
Expanded Unemployment Benefits
Extra $600 a week on top of state benefits for up to four months
Additional 13 weeks of extended benefits
Includes independent contractors, self-employed individuals, and part-time workers
Small Business Loans (Paycheck Protection Program)
Available to small businesses and 501(c)(3) organizations with fewer than 500 employees, sole proprietors, independent contractors, self-employed individuals, and more
Funds may be used for payroll support (including cash tips), sick and medical leave, insurance premiums, mortgage and rent payments, and utilities
Capped at greater of $10 million or 2.5x the borrower’s average monthly payroll cost
Loan forgiveness up to the entire principal amount if the business retains employees and maintains wages relative to the prior year
Forgivable portion of loan is equal to amount spent on payroll costs, mortgage interest, certain rent payments, and utilities during a specified 8 week period
Loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees compared to the prior year o Any employer who already laid off workers (afterFeb15) will not be penalized for having a reduced payroll if the employer rehires the workers
• Forgiven debt would not be treated as taxable income to the owner
Other Items
Allows employers to defer payment of their portion of 2020 payroll taxes until 2021 and 2022
Potential payroll tax credit for employers not receiving a loan under the Paycheck Protection Program
Student loan payments deferred through September
Required Minimum Distributions suspended for 2020
Allows certain early IRA withdrawals of up to $100,000 without any penalties and can spread the related income tax over 3 years
$300 above the line charitable contribution deduction for people who don’t itemize
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**Information provided is as of March 30, 2020. For the latest updates or any changes to the information above, please contact us directly**
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