The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the largest financial assistance bill ever, includes provisions for taxpayers, employees and help for small businesses. Here are the highlights.

Relief for Taxpayers

• up to $1,200 to Americans in the form of a one-time direct deposit with individual income up to $75K per year – complete phase out above $99K
• $2,400 for couples earning up to $150,000 per year – complete phase out above $199K
• $3,000 or $3,400 to family of four
• $500 per child under the age of 17 years
• Qualifying income levels will be based on 2019 tax returns if already filed or else based on 2018 returns
• For SSA-1099 – if both 2019 and 2018 returns have not been filed than the IRS will determine your eligibility based on your Form SSA-1099, Social Security Benefit Statement.
• Another voucher will be sent if the virus continues into the next quarter .
• Early withdrawal from IRA 401(k) s – anyone impacted financially by the virus can withdraw up to $100,000 from their tax-advantaged retirement accounts like 401(k)s without penalty. 3 year window will be given to repay the money if the individual wishes to avoid the income recognition

o   Income tax still has to be paid on this amount that can be spread over a 3-year period beginning with 2020

• Mortgages payments may be waived for 90 days – check with your lender.
• Federal student loan payments will be suspended through September 30.

Relief for Employees – Unemployment

 $600 per week added to normal state benefits for up to 4 months

• 1099 & self employed and gig workers as of right now may also apply.
• Benefits will last longer too. Regular state unemployment eligibility of 26 weeks has been expanded by an additional 13 weeks, for a total of 39 weeks.
• Workers who are furloughed, but haven’t been fully laid off, are eligible
• The 7-day waiting period before an unemployed worker can get benefits, which is a standard feature of most states’ unemployment systems, is being waived to help individuals receive cash as quickly as possible.

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Relief for Small Business

• $367 billion set aside for small businesses but unsure how to apply for this yet
• Delay in employer-side payroll taxes for Social Security until 2021 and 2022
• Paycheck protection loan – amount could be 2.5 times the average payroll for past 12 weeks between(Feb 15^th, 2019 till June 30^th, 2019). For employer who were in business in 2019. For new businesses 2020 payroll data will be used.
• A loan can be forgiven of the paycheck protection loan- the small business loan taken out and based on what the loan goes towards including- payroll costs, mortgage interest, rent, and utility payments the loan will be forgiven and it will not create taxable income

o   Some exclusions are reducing the salary or wage of the employee who earns less than $100,000 and reduced the workforce during the 8 week covered period compared to 2019 or 2020

• The Emergency Government Disaster Loan and Grants gives an immediate advance up to $10,000 after the business has applied and is not required to pay it back even if the borrower’s request is denied.
• Sole proprietors and ESOPs (employee stock ownership plan) are also able to access Economic Injury Disaster Loans
• Charitable contribution are itemized deductions and the standard deduction is $12,400 for a single taxpayer and $24,800 for married filing jointly in 2019

o   The Act allows an individual to make a cash contribution of up to $300 and deduct the contribution “above the line” when computing adjusted gross income. This allows the taxpayer to receive the deduction in addition to the standard deduction but only to a taxpayer that does not itemize their deductions.

o   For taxpayers who do itemize their deductions, the new law temporarily lifts the limits on charitable giving for 2020

• An employer can pay up to $5250 in 2020 for an employee’s student loan obligation on a tax-free basis.
• One year credit against the employer’s 6.2% share of Social Security payroll taxes for any business that is forced to suspend or close operations due to the virus but is still paying the employees during the shutdown. A business is eligible for the credit:

o   Operation of the business was fully or partially suspended during the calendar quarter during 2020 due to the virus

o   Business remained opened during the quarter of 2020; gross receipts were less than 50% of what they were for the same quarter in 2019. The business will be entitled to a credit for each quarter until the business has a recovered quarter where the receipts exceed 80% of what they were for the same quarter in the previous year

• For each eligible quarter, the business will receive a credit against the 6.2% share of social security payroll taxes with equal to 50% of the qualified wages paid to each employee during that quarter.
• Companies will be able to deter payment of 6.2% social security payroll tax (unsure of how long)
• Enable individuals to defer payment of their 2020 payroll taxes until 2021 and 2022.
• 50% refundable payroll tax credit on worker wages to retain workers
• The size of the business is also taken into consideration- more than 100 employees during 2019, the wagers will be limited to only those wages the employer paid during the shutdown; less than 100 employees, qualified wages include what was paid to employees during the shutdown but also wages paid for each quarter that the business has suffered
• Mortgages payments may be waived for 90 days – check with your lender.

Copy of the text of the bill: https://www.congress.gov/bill/116th-congress/senate-bill/3548/text

SBA web link to apply for the loan: https://www.sba.gov/disaster/apply-for-disaster-loan/index.html

Local banks are also working with SBA to disburse the loans – please check with your local bank as well.

Also attached is a checklist for small business loan. 

The Small Business Emergency Bridge Loan Program

• Available to different state for-profit businesses with 2 to 100 employees.
• Offers loans to businesses for amounts up to $50,000 at no interest for up to a one year term.
• Application:
• Find your local SBDC by visiting of the particular state. SBA’s Small Business Development Center (SBDC) consultants are available to assist you with the Emergency Bridge loan application.

SBA Economic Injury Loan Program

• Available to small businesses and private, non-profit organizations in the state to help alleviate economic injury caused by the Coronavirus (COVID-19).
• Provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.
• Application: https://disasterloan.sba.gov/ela/.
• Contact Information for the SBA:
  • Website: sba.gov/disaster.
  • Customer Service Center: 800-659-2955 or email [email protected].