CARES Act FAQ's + Expert Resources
What You Should Know: Coronavirus Aid, Relief, and Economic Security (CARES) Act
- Signed into law March 27
- $2 trillion emergency fiscal stimulus package
- Provides increased cash flow for individuals & small businesses
- Provides tax benefits for individuals & small businesses
- $454 billion in emergency lending to:
+ states and municipalities
+ airlines & other businesses critical to US national security
- $150 billion to states to offset amounts used to respond to the pandemic.
Provisions to Individuals
- Individuals who had up to $75,000 in adjusted gross income in 2019 will receive a one-time payment of $1,200
- Married couples with AGI up to $150,000 will get $2,400
- Taxpayers will receive an additional $500 for each qualified child
- Individuals and families with income above their respective thresholds will see their relief payments reduced by $50 for every $1,000 in AGI.
- Elimination of the early withdrawal penalty on coronavirus-related distributions up to $100,000 from retirement accounts
- Distributions paid back over 3 years will satisfy the eligible rollover rules normally applicable.
- Distributions not repaid are includable in taxable income, spread equally over a three year period
- Suspension of required minimum distributions (RMDs) in 2020 for a wide variety of retirement accounts (for both account owners as well as beneficiaries) as well as the ability to return current-year distributions
- An increase in the amount of allowable loans from qualified retirement plans from $50,000 to $100,000.
Unemployment benefits expanded:
Provisions for Small Business (up to 500 employees):
Expansion of SBA Loans, ie. Paycheck Protection Program (PPP):
- Expansion of SBA loan program, providing loans to offset payroll costs and other expenses during the coronavirus pandemic
- Maximum loan amount = lesser of (a) Average of total monthly payroll costs for prior year multiplied by a factor of 2.5 plus any Economic Injury Disaster Loan proceeds received or (b) $10M
- Potential for special loan forgiveness (all or partial) for payments made to cover payroll, rent, mortgage interest, utilities, and other expenses.
Loan proceeds allowed to compensate for: payroll costs, continuation group health benefits, interest portion of mortgage payments, rent, utilities, and other interest on other debt obligations originating prior to Feb 15, 2020.
Employee Retention Tax Credit:
- Tax credit for eligible employers equal to 50% of "qualifying wages"
- Eligible employers: either fully or partially suspended operations, as the result of government ordered coronavirus business restrictions; or where gross receipts decreased by more than 50 percent compared to the same calendar quarter in 2019.
- Qualifying wages: wages paid after Mar 12, 2020 and before Dec 31, 2020 to employees when they are not able to perform services as a result of the suspension of operations or decrease in business/receipts.
- Credit is claimed against the employer portion of social security taxes (not Medicare taxes).
Deferred Federal Payroll Tax Payments:
- The employers portion of social security payroll taxes may be deferred.
- Half of the deferred taxes will be due Dec 31, 2021, with the remaining balance due Dec 31, 2022.
Correction of the Qualified Improvement Property (QIP) Depreciation:
- A technical correction to the Tax Cuts and Jobs Acts (TCJA)
- Ability to file an amended return for an immediate cash refund of costs related to property improvements, known as Qualified Improvement Property (QIP)
- Each dollar of QIP placed in service since 2018 could potentially generate a refund in excess of forty cents.
- Improvements must be to an existing building, must be to the interior of the building, and must not be related to an enlargement of the building.
Flexible Net Operating Loss (NOL) Rules:
Expert Resources & White Papers...
For additional reading on the CARES Act, please use our the source links below: