Stimulus Package

CARES Act Resources

By
John Choudhary
on
April 2, 2020

Last Friday (04/27/2020) the House passed the Corona virus Aid, Relief and Economic Security (CARES) Act and it was signed into law by the President that evening.

Direct Monetary Payments

The government will send direct payments of up to $1,200 for individuals, $2,400 for couples, and $500 per child

  • Single taxpayers with an adjusted gross income up to $75,000 will receive $1,200 in direct payments,as will joint filers up to $150,000
  • Benefit decreases until eliminated for those making more than $99,000 filing single or $198,000 for those filing jointly
  • Social Security recipients, those with no taxable income, as well as those whose incomes are derived entirely from non-taxable programs, are still eligible for this relief as long as they have a work-eligible Social Security Number
  • 2019 tax filings will determine the amount of the payments to individuals and families. 2018 returns will be used for residents that did not file in 2019. For people who did not file a return in 2018 or 2019, IRS will use the information they have through the Social Security Administration or Railroad Retirement Board(SSA-1099/RRB-1099)

Enhanced Unemployment Benefits

The CARES Act provides enhanced unemployment benefits for uninsured individuals and makes unemployment insurance available to non-traditional employees

  • Unemployed will receive 4 months of state unemployment insurance and an additional $600 per week
  • Non traditional employees (gig workers and freelancers) and individuals not able to work because of the corona virus will be eligible to receive unemployment insurance for up to 39 weeks

Protecting Your Retirement Savings

The CARES Act waives the current year required minimum distribution (RMD) for defined contribution retirement plans, including 401(k)s, thrift savings plans (TSPs), and Individual Retirement Accounts (IRAs). Before the CARES Act was passed, individuals with these plans were required to begin withdrawing a percentage of their tax-deferred retirement plan when they turn 72 or face a penalty of 50% of the amount that should have been distributed.

Download Small Business Owners Guide To the CARES Act

Small Business Administration Lending Programs:

  • $349 billion for SBA loan guarantees, which businesses can use for payroll support, such as for employee salaries, paid sick or medical leave, insurance premiums, mortgage, rent, and utility payments.
    Notably, the bill allows loan forgiveness equal to the amount spent by the borrower if businesses use them for this purpose
  • $10 billion for SBA emergency grants of up to $10,000 to provide immediate relief for small business operating costs
  • $17 billion for SBA to cover six months of payments for small businesses with existing SBA loans
  • Sole-proprietors, independent contractors, and other self-employed individuals are also eligible for loans
  • Employers who previously applied for an SBA Economic Injury Disaster Loan are still eligible for 7(a) loans through SBA

Employee Retention Tax Credit

  • Eligible employers can take advantage of a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis, provided they did not receive SBA payroll support loans
  • The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee
  • The credit is generally available to employers whose operations were affected by COVID-19 and is based on qualified wages paid to the employee: 
    For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above.  
    For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order

Delay of Payment of Employer Payroll Taxes

  • Allows employers to delay paying the employer share of payroll taxes
  • Requires that the deferred employment tax be paid over the following two years

Protections for Federal Contractors

  • Provides paid leave for workers contracting with the federal government and requires agencies to provide flexibility, including additional time to carry out contract requirements, allowing for continued payment to prevent layoffs and service disruptions. More Information

Support for Student Loan Borrowers

  • Defers payments, principal, and interest for all federally-owned student loans through September 30, 2020
  • Provides $30.75 billion in grants to support local school systems and higher education institutions, including additional grants for students who need additional financial aid and work-study payments for students unable to work due to work-place closure
  • If a student dropped out as a result of COVID-19, it excludes the term from counting toward lifetime subsidized loan eligibility and lifetime Pell Grant eligibility
  • Allows employers to contribute up to $5,250 this year towards an employee’s student loan debts tax-free

Download Small Business Owners Guide To the CARES Act