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The CARES Act is comprehensive and far reaching. We went through the bill with our community and clients in mind, making note of the provisions that can help you the most in these trying times.
If you’re an individual that is suffering economic impacts as a result of the COVID-19 pandemic, certain provisions of the CARES Act may help.
Recovery rebates for individuals:
The bill provides a $1,200 refundable tax credit for US residents with adjusted gross income up to $75,000 for single filers ($2,400 for joint taxpayers). Taxpayers with children would also receive an additional $500 for each child. The government intends to send out these rebate checks in the coming weeks.
Your 2018 or 2019 tax return will be used to calculate the rebate. If direct deposit was used on your tax return, the rebate will be directly deposited into that bank account while others will receive a check in the mail.
See the links from CNBC below for more info:
Special rules for the use of retirement funds:
1. Waiving the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts
a. Income taxes on a coronavirus-related distribution can be paid over a three-year period
b. Recontributions to the plan can be made for up to three years
2. The mandatory 20% income tax withholding for rollover distributions is suspended
3. Required minimum distributions (RMDs) are suspended for 2020
4. Retirement plan loans have been modified to allow loans up to $100,000 or 100% of the vested balance. Repayment is also deferred for a year.
Forbes has a good article on this:
Expanded unemployment availability and benefits:
Unemployment benefits have been increased by $600 per week for up to four months, and now include those previously ineligible - such as the self-employed or independent contractors. The federal government will also fund an additional 13 weeks of unemployment benefits through December 21, 2020 after workers have run out of state unemployment benefits.
Check out what the Tax Foundation has to say on at the link below: