UPDATED 5/1/2020 – Sciarabba Walker hosted a webinar in the Tompkins Chamber of Commerce’s Business Readiness series covering the current status of CARES Act relief programs and additional available COVID-19 relief assistance. Watch the webinar on the Chamber’s YouTube channel here.

Original post

On Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump in an effort to provide economic relief in the wake of the COVID-19 (Coronavirus) pandemic.

Below are some of the key provisions of the bill. We will be providing additional, in-depth updates as more information becomes available.

Individual Tax Provisions in the CARES Act

  • 2020 Recovery Rebates/Credits for Individuals
    • A one-time check of $1,200 per individual and $500 per child for those with valid Social Security numbers. The rebate amounts are available to those with incomes under $75,000 for a single taxpayer, $112,500 for a head of household taxpayer and $150,000 for a married filing joint couple. Rebate amounts are phased out after these income thresholds.
    • Learn more: https://swcllp.com/maximizing-your-advanced-recovery-rebate-checks/
  • Retirement Accounts
    • Increase in the loan limits from retirement plans from $50,000 to $100,000. A waiver of the 10% penalty for early withdrawal for distributions from retirement accounts. The provision would waive minimum distributions requirements for 2020.
  • Charitable Contributions
    • An above-the-line deduction of cash contributions of up to $300 for taxpayers who cannot itemize. Suspension of AGI limitation on contributions made for taxpayers who are itemizing (currently through 2020 the limitation is 60% of AGI)
  • Employer-Sponsored Educational Assistance
    • Temporary expansion of the definition to include qualified student loan payments made to employees in 2020.

Business Income Tax Provisions in the CARES Act

  • Employee Retention Credit for Employers
    • The provision provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meeting.
    • Learn more: https://swcllp.com/employee-retention-credit-for-employers/
  • Employer Payroll Tax Payment Delay
  • Charitable Contributions
    • The corporate deduction limit would increase from 10% to 25% for Corporations.
  • Temporary Repeal of Taxable Income Limitation for Net Operating Loss (NOLs)
  • Modification of Rules Relating to Net Operating Loss (NOL) Carrybacks
  • Modification of Limitation on Losses for Noncorporate Taxpayers
    • Temporarily modifies the loss limitation for noncorporate taxpayers so they can deduct business losses arising in 2018-2020.
  • Corporate Minimum Tax Credit (MTC) is Accelerated
    • Allows corporations to claim 100% of AMT credits in 2019.
  • Deductibility of Interest Expense Temporarily Increased
    • Temporarily and retroactively increases the limitation on the deductibility of interest expense from 30% to 50% for tax years beginning in 2019 and 2020. There are also special rules for partnerships.
  • Bonus Depreciation Technical Correction for Qualified improvement Property

Small Business Provisions in the CARES Act

  • Small Business Administration Paycheck Protection Program
    • Assistance with covering payroll and other expenses from February 15 to June 30 for employers with fewer than 500 employees. Small businesses may take loans of up to $10 million, limited to a calculation based on payroll costs and provides coverage of employees earning up to $100,000 a year. If the loan proceeds are used for certain expenses the loan may be forgiven. The amount forgiven would be reduced based on the reduction of workforce employees.
    • Learn more: https://swcllp.com/sba-paycheck-protection-program/
  • Small Business Administration Economic Injury Disaster Loan Program
  • Small Business Administration Loan Payments

Unemployment Provisions in the CARES Act

  • Unemployment Insurance
    • The act provided many changes to unemployment including who qualifies and the amount and duration of benefits. Self-employed workers (including gig workers and independent contractors), part-time employees and employees with limited work histories are now eligible for benefits. There will no longer be a week waiting period, benefits will now include an additional $600 per week payment to each recipient for up to 4 months, and provide benefits for an additional 13 weeks.
    • Learn more: https://swcllp.com/cares-act-unemployment-insurance-provisions/
  • Temporary Financing and Grants for Short-Time Compensation in States with Programs in Law
    • The provision would provide 100% federal reimbursement to states for payments made under qualifying short-time compensation programs, also known as work-sharing programs through December 31, 2020. The provision would also create a grant program in which the federal government can provide grants to states for the purpose of implementing or improving short-time compensation programs.
  • Temporary Financing of Short-Time Compensation Agreements
    • Would permit states that do not have formal short-time compensation laws to enter into agreements with the Department of Labor to enact short-time compensation plans and receive 50% reimbursement for payments through December 31, 2020.

Other Provisions

  • Coronavirus Relief Fund
    • Provides $150 billion to states for necessary expenditures incurred in responding to the coronavirus outbreak.
  • Additional measures which provide funding for hospitals and other branches of government.

Click here to read our blog post covering the additional programs and credits which were announced prior to the CARES Act being signed into law including the Paid Sick Leave Refundable Credit and Paid Family Leave Refundable Credit.

Please follow us on Facebook, Twitter, and LinkedIn for future updates. If you have any questions, please reach out to your main Sciarabba Walker contact or email us at info@swcllp.com.