On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“THE CARES ACT”), a $2 trillion relief package to support the U.S. economy. The bill provides economic relief to individuals and businesses that are adversely impacted by the COVID-19 virus. Below, we’ve highlighted key provisions of the bill and compiled a list of resources that go in depth regarding specific sections of the bill.
Features of the bill include:
- Tax filing extended until July 15, 2020
- Elimination of 2020 Required Minimum Distributions (RMDs)
- Flexibility for use of retirement funds
- 10% early withdrawal penalty waived for distributions up to $100,000 from qualified retirement accounts.
- Distributions will be taxed over three years.
- Extended deadline for 2019 IRA contributions
- Individual tax credit
- An individual tax credit of $1,200 single ($2,400 married) is provided to eligible taxpayers and an additional $500 per child.
- The credit is not available for single filers with incomes exceeding $99,000; head of household filers with one child with income exceeding $146,500, and joint filers with no children with incomes exceeding $198,000. The tax credit is reduced by $5 per $100 in income over $75,000.
- For most taxpayers, no action on their part will be required as the IRS will use a taxpayer’s 2019 tax return if filed, or their 2018 return to calculate the credit.
- Charitable giving provisions
- Allows taxpayers to deduct up to $300 of charitable cash contributions, whether they itemize or not.
- Temporary relief for federal student loans & residential home mortgages
Below is a list of resources related to the CARES Act:
CARES Act Summarized by Jamie Hopkins, Esq.
In this guide, Jamie breaks down the six main sections of the act: Employment, individual and business assistance, support for the health care system, economic stabilization, coronavirus relief funds, and miscellaneous provisions.
CARES Act Tax Provisions Aim to Stabilize Pandemic-Ravaged Economy by Alistair M. Nevius, J.D.
The CARES Act contains several major tax changes that are applicable to both individuals and businesses. For specifics on how these may affect you, we recommend talking with your accountant or CPA.
Major Changes in RMDs and Retirement Contributions in $2T Stimulus Plan by Ed Slott
In addition to the tax filing extension, IRA contributions have also been extended to the same date, July 15. The CARES Act also includes major changes to RMDs which will affect most retirees.
Coronavirus Emergency Loans: Small Business Guide and Checklist by U.S. Chamber of Commerce
The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Read this guide to find out if your business is eligible.
The team at LVW is diligently unpacking the various pieces of the CARES Act and how it may affect your personal or business financial situation. While complex, there are features and nuances that will affect most people. We will continue to add resources to this post as we see fit. If you have questions about the CARES Act and how it may impact you, please contact us.