The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion economic relief plan which includes direct payments to Americans, strengthened unemployment insurance, loans to businesses, and increased health-care resources. The CARES Act was signed into law by President Trump on Friday, March 27, 2020.
We’ve summarized the aspects of the bill we believe most affect our clients below. There are additional benefits to specific industries and states along with special provisions.
Direct Payments to Individuals
- One-time direct payments of up to $1,200 for individuals making up to $75,000 a year, and $2,400 to married couples making up to $150,000.
- The benefit would start to phase out above $75,000 in income for individuals and $150,000 for couples. No benefit will be given at the $99,000 and $198,000 thresholds, respectively. The sliding scale reduction is set at $5 for every $100 of income. (You can find your adjusted gross income on Line 8b of the 2019 1040 federal tax return.)
- There will be an additional payment of $500 per child.
- Payments will be determined based on 2019 tax returns for those who filed them and 2018 information for those who have not. Those who have not filed a tax return since 2017 may not receive a payment. If you do not file taxes, a Social Security benefit statement (form SSA-1099) or a Social Security equivalent benefit statement (form RRB-1099) will be used.
- Payments will arrive faster for those who got their tax return through direct deposit. To change a bank account or a routing number for the deposit, call the IRS customer service line at 800-829-1040. If you will receive a paper check and have moved since you last filed should submit a change of address form, which normally takes four to six weeks to process.
- There’s no need to do anything if you have already filed 2018 and 2019 taxes and your information is up to date and accurate.
Small Business Benefits
- $350 billion in loans for small businesses to cover salary, wages and benefits, worth 250 percent of an employer’s monthly payroll, with a maximum loan of $10 million.
- Tax credit for retaining employees, worth up to 50 percent of wages paid during the crisis, for businesses forced to suspend operations or that have seen gross receipts fall by 50 percent from the previous year. [Now available: US Chamber’s Guide to the Employee Retention Tax Credit]
- Delay payroll tax for employers, requiring half of the deferred tax to be paid by the end of 2021 and the other half by the end of 2022.
- An additional $600 in weekly unemployment benefits for four months and the duration of payments will increase by 50 percent, from 26 weeks to 39 weeks.
- Unemployment benefits will now be extended to:Independent Contractors/gig workers, small-business owners, sole proprietors/self-employed, and the partly employed.
- Those without a sufficient work history to qualify for benefits under normal circumstances (i.e., you were about to start or were immediately laid off from a new job).
- Anyone whose job-loss or reduction in hours was related in any way to COVID-19.
- Workers who are able to work from home, those receiving paid sick leave or paid family leave, and new entrants to the work force who cannot find jobs would not be eligible.
We continue to update our Coronavirus Resources page. KRS professionals are available and working remotely. Please contact us if you have any questions, concerns, or need advisement during this unprecedented time.