CARES ACT Assistance For Individuals And Business Owners
Below is a summary of the critical legislation that went into effect on March 27, 2020. We’ve compiled the following review as a resource to find additional information on each of the program specifics. To see if you’re eligible for the benefits listed below, follow the links referenced. Please reach out if you need assistance determining which if any of these programs would be beneficial to you. We will do our best to update this information as new details present themselves.
Resources for more information:
IRS.gov – Coronavirus Tax Relief
NELP.org - Unemployment Insurance Provisions under CARES Act
Studentaid.gov – Federal Student Loan Payments and Interest Waived
DOL.gov – Sick Leave and Expanded Family and Medical Leave
SBA.gov – Coronavirus Small Business Guidance & Loan Resources
ASSISTANCE FOR INDIVIDUALS
2019 Tax Filing Deadline Moved to July 15, 2020
Here is a great FAQ resource on the IRS website
Federal tax filing deadline extended to July 15, 2020.
Most states, including KS & MO, have extended their filing deadline as well but be sure to check with your CPA or each states department of revenue website to verify.
2019 IRA, Roth IRA and HSA contributions also extended to July 15, 2020.
If you pay estimated quarterly taxes, your first quarter estimated tax payment for 2020 has been extended to July 15, 2020, as well. As of right now, your second quarter estimated tax payment for 2020 is still due on June 15, 2020.
Recovery Rebates for Individuals
How much could you get in your stimulus check?
The Recovery Rebate Credit is a special one-time payment that will provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child. The rebates would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset. This is a tax free payment from the federal government. The rebate starts to phase out at $75,000 for singles, $112,500 for heads of household, and $150,000 for joint taxpayers. It phases out entirely at $99,000 for single taxpayers with no children and $198,000 for joint taxpayers with no children. 2019 or 2018 tax returns will be used to calculate the rebate advanced to taxpayers, but taxpayers eligible for a larger rebate based on 2020 income will receive it in the 2020 tax season.
Checks and or direct deposits should arrive by the end of April. You can check on your status here.
If you believe your 2019 income would allow you to qualify for this rebate as your 2018 income was too high, it’s recommended that you get your taxes filed ASAP and have your direct deposit information on file with the IRS.
Required Minimum Distributions Are Waived in 2020
Section 2203 of the CARES Act suspends Required Minimum Distributions (RMDs) during 2020. This provision is broad and applies to Traditional IRAs, SEP IRAs, and SIMPLE IRAs, as well as 401(k), 403(b), and Governmental 457(b) plans. Furthermore, the relief applies to both retirement account owners, themselves, as well as to beneficiaries taking stretch distributions.
Coronavirus-Related Distributions
Coronavirus-Related Distributions are distributions of up to $100,000, made from IRAs, employer-sponsored retirement plans, or a combination both, which are made in 2020 by an individual who has been impacted by the Coronavirus.
You must be able to prove that you have been affected by the Coronavirus to be eligible.
10% Early withdrawal penalty is waived.
Not subject to mandatory withholdings.
Eligible to repay the funds to back to your account over a 3 year time period.
Distributions will be taxable as income but will be split over a 3 year time period or if elected can be claimed all in one year.
Relief for Student Loan Borrowers
Find out what the relief package means and what student loan borrowers can do
Payments on most federal student loans are suspended through September 30, 2020, and no interest will accrue during this time.
It may take a few weeks for your lender to update this information on their website.
Some private lenders are also offering relief.
You may have to fill out a form or accept that you would like to stop making payments with your lender, please don’t assume it will be automatic.
If you have automatic payments set up, they could be canceled, so if you’d like to continue making payments towards your principal during this 0% interest time period, you may have to make your payments manually.
Unemployment Compensation Benefits Expansion
Pandemic Unemployment Compensation – unemployment benefits will receive an additional $600/week boost in compensation over the usual regular calculated state unemployment benefits until July 31, 2020.
Pandemic Emergency Unemployment Compensation – unemployment benefits will be available for an additional 13 weeks over the typical 26 week payment period. Also, the one week waiting period has been waived.
Pandemic Unemployment Assistance – this provision grants emergency unemployment assistance to workers who are typically not eligible for unemployment benefits, including self-employed workers, freelancers, and people without a long enough work history to qualify for state unemployment benefits.
Be patient as a lot of states are being inundated with claims and haven’t gotten things set up for these new programs.
ASSISTANCE FOR SMALL BUSINESS OWNERS
Small Business Owners - SBA Paycheck Protection Program – Lenders will start processing applications on April 3, 2020!!!
Details about the Paycheck Protection Program from the SBA
Loans issued through 6/30/2020 with the opportunity to have some of the loan forgiven if used to pay operational costs like payroll, rent, health insurance, insurance premiums, utilities, and other overhead expenses. Due to the high demand, 75% of the forgiven amount must have been used for payroll.
No Collateral, No personal guarantee.
Interest rate of .5% and 2 year term.
Forgiven loan amounts not subject to income tax for the amount spent during the first 8 weeks of loan origination.
Small Business Owners – Economic Injury Disaster Loans
Apply directly for the SBA’s Disaster Assistance Program
EID loans may be used to pay fixed debts, payroll, accounts payable, and other bills because of the disaster’s impact.
Cannot be used for refinancing, growth/expansion of any kind or infrastructure improvements.
EID loan applications can request an Emergency Advance of $10,000 paid in 3 days without paying it back.
Short-Time Compensation or Shared-Work Program
Review this fact sheet for all of the details of the program here.
Short-time compensation is an alternative to employers experiencing a reduction in available work. It allows employers to reduce hours of work for employers and allows those employees to collect a percentage of their unemployment compensation benefits to replace a portion of their lost wages.
Employee Retention Credit
Check out these basic FAQs from the IRS on how to qualify for this credit
The Employee Retention Credit is a fully refundable tax credit for employers equal to 50% percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021.
Eligibility requires that an employer must be fully or partially suspended operations during any calendar quarter in 2020 or experience a significant decline in gross receipts during the calendar quarter.
Deferral of Payment of Payroll Taxes
Does it make sense to take advantage of the payroll tax deferral?
Employers are eligible to defer payroll taxes from the date of enactment of the CARES Act, through the end of the year, until 2021 & 2022. Half will be due on 12/31/20201, and the other half will be due on 12/31/2022.
Employers that have any loan amounts forgiven by the SBA programs will not be eligible for the payroll tax deferment.
BRANDY BRANSTETTER, CFP®
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.