The CARES ACT

Our nation’s lawmakers have agreed on a $2 trillion stimulus bill called the CARES (Coronavirus Aid, Relief and Economic Security) Act, designed to provide relief to both American citizens and businesses who have been negatively affected by the COVID-19 pandemic. Here’s what you need to know.

INDIVIDUALS

Direct Payments
All Americans will receive a one-time rebate of up to $1200 ($2400 for married couples) with an additional payment of $500 per child. Those individuals making between $75,000 and $100,000 ($150,000 and $200,000 if married) will have their rebate reduced, and no checks will be issued to those with incomes above these thresholds.

Unemployment
The CARES Act provides $250 billion for an extended unemployment insurance program. Eligibility has been dramatically expanded, and benefits can be received for up to 39 weeks. This program will pay individuals $600/week for 4 months, on top of state program payments. Additionally, the self-employed, gig economy workers and contractors are eligible for this benefit.

Retirement Funds
The 10% early withdrawal penalty has been waived. The amount withdrawn is still subject to tax, but that tax burden can be spread across three years. Optionally, this amount can be repaid back over the same three years, allowing for contributions in excess of the typical annual limits. Additionally, 401k loan limits have been increased from $50,000 to $100,000.

COVID Testing/Treatment
The costs of testing for COVID-19 will be fully covered, as well as any potential vaccine or treatment developed.

Student Loans
The act allows for the suspension of payments, interest, and garnishment on federal student loans through September 30, 2020.

FOR BUSINESSES

Small Businesses

The Act dedicates $350 billion to small businesses (under 500 employees) to prevent layoffs and closures. The portion of a company’s loan used for payroll, interest, mortgage, rent, and utilities can be forgiven if employee payroll is maintained. This is the Paycheck Protection Program.

PAYCHECK PROTECTION PROGRAM

Large Corporations
A $500 billion stimulus to large corporations is provided by the CARES Act. Unlike the small business program, these loans cannot be forgiven and must be paid back within 5 years.

Corporate Tax
Businesses can choose to delay their quarterly tax payments until October 15, 2020.

Payroll Tax Relief
Businesses can delay the employer half of the payroll tax for 2020. These payments can be spread across 2021 and 2022.

Additional Provisions

• $140 billion has been set aside for hospitals and the healthcare industry.
• $150 billion will be provided for state and local governments.
• The bailout limit for the agricultural sector has been raised from $30 billion to $50 billion.
• Business operating losses can now be carried back five years.

At a time of great difficulty, it is refreshing to see our lawmakers put away their differences and come together to create legislation designed to see us through this crisis!