The CARES Act will provide billions of dollars of relief to individuals, businesses, state and local governments, and the health care system.
After extensive negotiations, an agreement was reached on a massive stimulus bill to address the financial and health care crisis resulting from the coronavirus (COVID-19) pandemic.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by the Senate and is expected to be passed by the House, although the mechanics are still to be determined because most House members are currently in their home districts. The President has indicated that he will sign the legislation.
The CARES Act includes a “Marshall Plan” for the health care system to help provide needed treatment during the pandemic and financial assistance to state, local, tribal and territorial governments, as well as to private nonprofits providing critical and essential services. It also provides significant relief to individuals, businesses and other employers to help them weather the pandemic.
Key Provisions
Here’s a quick look at some of the CARES Act provisions, as it is currently written:
Individuals
- Recovery rebates of up to $1,200 for singles, $1,200 for heads of households and $2,400 for married couples filing jointly — plus $500 per qualifying child — subject to income-based phaseouts starting at $75,000, $122,500 and $150,000, respectively
- Expansion of unemployment benefits, including for self-employed and gig-economy workers
- Waiver of the 10 percent penalty on COVID-19-related early distributions from IRAs, 401(k)s and certain other retirement plans
- Waiver of required minimum distribution rules for IRAs, 401(k)s and certain other retirement plans
- Expansion of charitable contribution tax deductions
- Exclusion for certain employer payments of student loans
Businesses and other employers
- Retention tax credit for eligible employers, who continue to pay employee wages while their operations are fully or partially suspended as a result of certain COVID-19-related government orders
- Deferral of the employer portion of payments of certain payroll taxes
- Modification of net operating loss (NOL) and limitation on losses rules
- Modification of the deduction limitation on business interest
- Qualified improvement property technical correction, allowing qualifying interior improvements of buildings to be immediately expensed rather than depreciated over a period of years
- Expansion of the ways the Small Business Administration (SBA) can help small businesses
More details to come
This is just a brief overview of the CARES Act. Zinner & Co. will share additional details on the provisions, which are likely most relevant to you or your business in the coming days. In the meantime, do not hesitate to reach out to us with questions or concerns you have about taxes or your individual financial or business situation.