You may have heard the news that President Trump signed a roughly $2 trillion stimulus package into law, in response to the corona virus pandemic, but what does that mean for you and will you benefit from the new law? The purpose of the CARES Act is to provide” emergency assistance and health care response for individuals, families and businesses affected by the 2020 coronavirus pandemic.” There are many components to the new CARES Act, but below are three main areas that might be of interest to you.
Direct Payments to Individuals and Families
Part of the CARES Act stimulus package is making payments directly to individuals. Be warned, however, there does not appear to be a certain date for distribution of the payments, they are simply required to be made “as rapidly as possible.” On the early side, payments are projected to be distributed by the beginning of April and conservative estimates project four to six weeks before payments are made. Payments are made by direct deposit if that is how your tax refund was received, otherwise they will be sent by check in the mail. The payments will be as follows:
- Eligible individuals¹ with adjusted gross incomes of up to $75,000 will receive $1,200
- Married couples filing jointly will receive $2,400.00
- The credit will be phased out (by 5%, but not lower than zero) if the taxpayer’s adjusted gross income exceeds: (1) $150,000 in the case of a joint return; (2) $112,500 in the case of a head of household; and (3) $75,000 in the case of an individual.
- Parents will receive $500.00 for every qualifying child²
The qualifying income levels for the above payments are based on 2019 federal tax returns, if already filed, and otherwise on 2018 tax returns. The payments are also not subject to tax and those who owe back taxes will still be sent a check.
Small Business Loans
The CARES Act also provides relief for small businesses that are having trouble covering payroll and operating expenses because of the coronavirus pandemic. The law creates a Small Business Administration (“SBA”) loan program, called the “Paycheck Protection Program” that expands benefits and eligibility for SBA disaster loans, covers payments on existing SBA loans, and creates new tax credits to help cover the cost of paid leave and payroll.
Small businesses with less than 500 employees are eligible to receive loans. Loans must be used for certain allowable purposes including but not limited to: payroll costs, costs related to group health care benefits, employee salaries, interest payments on mortgages, rent, and utilities.
For more information regarding SBA loans that may be used to pay for payroll and other operating expenses see: https://www.schatz.senate.gov/coronavirus/small-businesses/sba-paycheck-protection-loan-program
For more information on debt relief for an existing SBA loan see: https://www.schatz.senate.gov/coronavirus/small-businesses/sba-debt-relief-program
The CARE Act also expands the scope of individuals who are eligible for unemployment benefits to include those who are furloughed or out of work as a direct result of coronavirus, self-employed or gig workers, and those who have exhausted existing state and federal unemployment benefit provisions. The law also provides an increase of $600 per week, which applies to unemployment payments made from the date of the law’s enactment through July 31, 2020.
For more information on this article, contact Joanna at firstname.lastname@example.org.
¹ An “eligible individual” is any individual other than: (1) any nonresident alien individual; (2) any individual whom a deduction is allowable to another taxpayer; and (3) an estate or trust
² A qualifying child is a child who is generally any dependent of a taxpayer under the age of 17.