COVID Stimulus Resources

COVID Stimulus Resources
 
THE CARES ACT: The Coronavirus Aid, Relief, and Economic Security Act
 Text of the Bill: https://files.taxfoundation.org/20200325223111/FINAL-FINAL-CARES-ACT.pdf
 

Part 1: (For Businesses) Keeping American Workers Paid and Employed Act

  • Paycheck Protection Loan Program

  • The clearest summary of the Paycheck Protection Program I’ve seen – very useful
  • What is the benefit: Expansion of the SBA 7(a) lending program which allows businesses suffering due to the outbreak to borrow money for a variety of qualified costs related to employee compensation and benefits, including (a) payroll costs, (b) continuation of health care benefits, (c) employee compensation of those making less than $100K, (d) mortgage interest obligations, and (e) rent and utilities. The program provides loan forgiveness equal to the amount spent on the above items, for 8 weeks beginning on the origination date of the loan. The loan forgiveness provisions will be reduced in proportion to any reduction in employees and to a reduction in employees’ pay of greater than 25 percent.
  • Who is eligible: Small businesses and nonprofits with fewer than 500 employees, sole-proprietors, independent contractors, and self-employed individuals. Borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period. You cannot apply for this program if already receiving an SBA Economic Injury Disaster Loan (EIDL).
  • How to receive these benefits: 
  •  Emergency Economic Injury Grant
    • What is the benefit: A grant up to $10,000 to small business and private non-profits harmed by COVID-19 within three days of applying for an EIDL. The advance does not need to be repaid and must be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply disruptions, or pay business obligations.
    • Who is eligible: Small, sole proprietorships, independent contractors, and private non-profits.
    • How to receive these benefits: Apply through the SBA and then request the advance.

 

Part 2: (For Businesses, Cont’d) Additional Provisions

  • Employee Retention Credit for Employers Subject to Closure Due to COVID-19

      • What is the benefit: A 50% refundable payroll tax credit on wages paid up to $10,000 during the crisis for employers, or up to a $5,000 credit per employee.
      • Who is eligible: Employers whose businesses were disrupted to virus-related shutdowns and firms experiencing a decrease in gross receipts of 50% or more when compared to the same quarter last year. 
      • How to receive these benefits: Continue to employ your employees during this time. This credit will be calculated when we do your 2020 returns.
  • Delay of Payment of Employer Payroll Taxes

      • What is the benefit: Employers can delay the employer-side of payroll taxes until January 1, 2021, with 50% owed on December 31, 2021 and the other half owned on December 31, 2022.
      • Who is eligible: All employers.
      • How to receive these benefits: Contact your payroll administrators.
  • Modifications for Net Operating Losses (“NOL”)

      • What is the benefit: Businesses can take NOLS earned in 2018, 2019, or 2020 and carry back those losses 5 years, and have them fully offset their taxable income (no more limits).
      • Who is eligible: All businesses with NOLS earned in the aforementioned years.
      • How to receive these benefits: You may benefit from an amendment to a previous return.
  • Qualified Improvement Property

      • What is the benefit: Businesses are able to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building.
      • Who is eligible: All businesses with nonresidential real property.
      • How to receive these benefits: If you are thinking of making improvements to your business property or non-residential rentals, this is definitely the year to do it for maximum tax savings.
  • Employer-Paid Student Loan Benefits

      • What is the benefit: Payments made by an employer for an employee’s principal or interest on qualified educational loans may be excluded from income up to the maximum exclusion amount of $5,250. In other words, your small business can deduct student loan interest paid on behalf of an employee, and it won’t count towards the employee’s taxable income.
      • Who is eligible: Small businesses with employees.
      • How to receive these benefits: Provide this benefit to all existing employees for 2020.
  • Misc Small Business Resources

Part 3: (For Individuals) Assistance for American Workers, Families, and Businesses

  • Unemployment Insurance Provisions 

    • What is the benefit: An increase of $600 per week in the amounts customarily available for unemployment under state law.
    • Who is eligible: Expanded eligibility, including those that are out of work temporarily as a direct result of COVID-19, self-employed, independent contractors, and those with limited work history (this is not open to those that can telework with pay or who are receiving paid sick leave or similar benefits).
    • How to receive these benefits: Apply through your state’s Employment Development Dpt. 
  • Tax Credits (Direct Payments)

  • What is the benefit: A $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers), with an additional $500 for each qualifying dependent. This will not be counted towards taxable income.
  •  Who is eligible: All individuals with an Adjusted Gross Income (AGI) less than $75,000 for singles, $112,500 for HoH, and $150,000 for joint filers (refer to line 7 of your 2018 form 1040, or 8b of your 2019 form 1040). This phases out after these thresholds and phases out entirely at $99,000 for singles with no children, and $198,000 for joint filers with no children. It will be based on your AGI reported on your 2019 returns if filed, or 2018 returns if not. Taxpayers eligible for a larger rebate based on 2020 income will receive it in the 2020 tax season, those with higher incomes in 2020 will not have to repay the credit.
  •  How to receive these benefits: Just wait or file your 2019 returns if they show qualifying AGI.
  • Coronavirus-Related Retirement Distribution

  •  What is the benefit: Early retirement plan distributions (from both employer sponsored plans and individual retirement plans) up to $100K will not be charged the traditional 10% tax penalty. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps.

o   Who is eligible: Any individual who is either diagnosed with COVID-19, whose spouse or dependent is diagnosed with COVID-19, or who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, has had hours reduced, etc.
o   How to receive these benefits: Call your retirement plan administrator.

  • Waiver of Required Minimum Distributions

  • What is the benefit: Waiver of minimum distribution requirements for most defined contribution plans, eligible employer deferred compensation plans, and IRAs.
  • Who is eligible: Anyone who had required minimum distributions that would have otherwise been required to be made in 2020.
  •  How to receive these benefits: Do nothing.
  • Charitable Donation

  • What is the benefit: Taxpayers are able to take an above-the-line deduction for charitable contributions of up to $300 for 2020.
  • Who is eligible: All taxpayers, regardless if you itemize or not.
  • How to receive these benefits: Donate.
  • Student Loans

  • What is the benefit: Payments due on federally-held student loans are suspended, and interest will not accrue through September 30, 2020. All involuntary collections relating to student loans are also suspended, including garnishment of wages and reductions of tax refunds and other Federal benefits.
  • Who is eligible: All taxpayers with student loans.
  • How to receive these benefits: Pause student loan payments with no penalty if you need more cash now.

Part 4: (For Individuals) Misc Benefits

  • Product Discounts and Fee Waivers

  • Very useful product discount aggregator:  Organized by food/delivery, education, entertainment, consumer goods, business/tech, and health/fitness.  
  • Verizon: Waiving late fees and suspending service termination for customers “negatively impacted by the global crisis.” No additional action necessary.
  • T-Mobile: Providing unlimited data to all current customers who have plans with data for the next 60 days. It will also provide additional data to mobile hotspot users.

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