Overview
Passed on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is the largest economic bill in U.S. history -- a $2.2 trillion emergency fiscal stimulus package designed to help ease the effects of the economic damage being caused by the coronavirus. It includes varied types of financial support for individuals, businesses, healthcare entities and state and local governments.
The Act itself is over 800 pages long, and many details are being clarified and revised as it rolls out. The table below highlights some of the relief opportunities for individuals and businesses. We also provide a few planning thoughts and links to resources with important details.
As we learn more about the Act in the coming days, we’ll update the table. Please note that the table’s content does not constitute tax or investment advice. It is offered, rather, to help spot potential opportunities for financial support. Please consult your tax advisor, attorney, or other professional for advice regarding the Act.
Financial Support for Individuals
Financial-Support Provision | Notes & Resources |
Tax-Filing Deadline What is it? Tax filing and payment deadlines are automatically extended from April 15, 2020, to July 15, 2020. To whom does it apply? Taxpayers - individuals & businesses. | Planning Thoughts - If you’re owed a refund or will qualify for an economic impact payment, consider filing now. - Contribution deadlines for IRAs and Roth IRAs are extended until July 15, 2020 or your tax-filing date. Resources |
Economic Impact Payments What is it? Direct payments of $1,200 for individuals, $2,400 for couples, and $500 for children under age 17. To whom does it apply? Most taxpayers. | Planning Thoughts - Eligible for payment if your 2018 or 2019 (most recent tax return on file) adjusted gross income (AGI) is below $99K/$198K (single/married filing joint). - Payment is reduced starting at AGI of $75K/$150K. - Consider filing your 2019 tax return now if you don’t qualify under your 2018 tax return. - People on social security are eligible for the payment, as long as their income is below the threshold. - Payments should come in the next few weeks, either by check or by auto-deposit, depending on how you paid your taxes.
Resources |
Required Minimum Distributions What is it? Waiver of required minimum distributions for certain retirement plans and accounts. To whom does it apply? All plan participants | Planning Thoughts - RMDs suspended for 2020 for company retirement plans and individual plans, including inherited IRAs. - First timers may suspend 2019 RMD in addition to 2020 RMD. - Can put back a distribution already taken within 60 days. - Waiver of distribution requirement applies to inherited IRAs and those on the 5-year rule as well. Resources |
Loans from Employer Plans What is it? Increase in loan allowance for tax-qualified retirement plans (e.g., 401k, 403b). To whom does it apply? Covid-19 qualified individuals with eligible retirement plans. | Planning Thoughts - Must be a qualified individual. - Loans up to 100% of vested balance, maximum of $100,000. - Payments owed this year on the loan are deferred for a year. Resources |
Coronavirus-Related Distributions on Retirement Accounts (CVRD) What is it? Penalty free distribution of up to $100,000 from an eligible retirement plan or IRA. To whom does it apply? Covid-19 qualified individuals with eligible retirement plans. | Planning Thoughts - Must be a qualified individual. - Waives the 10% penalty if you’re under 59 ½. - Used as a last resort for access to funds. - Distributions are taxable if not repaid. - Can opt to pay the income tax due on the distribution over 3 years and also have up to 3 years to put the money back in the account (and recoup any taxes paid). Resources |
Student Loans What is it? Relief for federal student loan borrowers To whom does it apply? Federally backed student loans borrowers. | Planning Thoughts - Must be a federal student loan. - Suspends payments on federally backed student loans until 9/30/2020. - Loans will be interest free until 9/30/2020. - Contact your student-loan administrator to confirm if you qualify. Resources |
Unemployment Benefits What is it? Unemployment payments to individuals. To whom does it apply? Individuals who filed for unemployment benefits. | Planning Thoughts - Each state has its own specific guidance. - Increases weekly unemployment benefits by $600 a week for up to four months. - Includes self-employed and part-time employed people. - Payment period extended by 13 weeks and 1-week waiting period is waived. Resources |
Charitable Donations What is it? $300 charitable deduction in addition to the standard deduction. To whom does it apply? Taxpayers who do not itemize their tax deductions (90% of filers). | Planning Thoughts - The stimulus package also waived the 60% of adjusted gross income limit on cash donations to charities (not including donor-advised funds). - A large donation can also be carried forward up to 5 years. Resources |
Scams What is it? Scams to obtain personal information or asking for payment to get “early access” to funds. To whom does it apply? Most taxpayers. | Planning Thoughts - Do not give anyone your personal information to “sign-up” for your relief check. Resources |
Others: - Healthcare-related Rules - HSAs, MSAs, FSAs | - Medicare Part D plans to provide up to a 90-day supply of covered Part D drugs to enrollees who request it. |
Financial Support for Businesses
Financial-Support Provision | Notes & Resources |
Paycheck Protection Program (PPP) What is it? Low-interest loans with potential for forgiveness on qualifying expenses. To whom does it apply? Small business owners with 500 or fewer employees who are impacted by the uncertainty caused by Covid-19. | Planning Thoughts - Issued by SBA approved lenders. - Loans available up to 2-year term, no prepayment penalties. - Loan amount equal to 2.5 monthly payroll, up to $10M. - Can be used to pay payroll, rent, utilities, and the amount used to pay those expenses during the first 8 weeks after disbursement can be forgiven by the government, provided certain criteria are met. - Applies to non-profits as well as small businesses. - Work with your banker. - Tax accountant may help with the calculation for loan amounts. - Must choose between PPP and Employee Retention Credit program. Resources |
Economic Injury Disaster Loan Emergency Advance What is it? Up to $10,000 of economic relief for businesses experiencing temporary difficulties. To whom does it apply? All small business owners with 500 or fewer employees and some businesses with greater than 500 employees. | Planning Thoughts - Funds will not have to be repaid if used for qualifying expenses. - Application must be approved by SBA. Resources |
Employee Retention Credit What is it? Refundable tax credit of 50% up to $10,000 of each employee’s qualifying wages. To whom does it apply? Businesses fully or partially suspended by government order due to Covid-19 | Planning Thoughts - Must choose between PPP and Employee Retention Credit program. Resources |
Others: - Deferral of Payment of Payroll Taxes - Net Operating Loss (NOL) Rules |
Additional Resources
Small Business Administration - Coronavirus Relief Options
Treasury Department - CARES Act
Social Security - Coronavirus Support
AICPA - Coronavirus Resource Center