By Rick Bell
Mar. 31, 2020
To help stabilize the U.S. economy in the wake of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, aims to boost the economy with $2 trillion in tax and non-tax emergency aid for individuals and businesses.
That package includes measures and appropriations to provide financial relief to businesses, individuals and families. The CARES Act, which was passed by Congress on March 27, is the third relief measure and follows the Families First Coronavirus Response Act and the Small Business Administration’s Economic Industry Disaster Loan Program.
The CARES Act is designed to assist businesses and individuals in addressing the economic hardships caused by the coronavirus pandemic. Following is an overview of key elements:
PROVISIONS FOR BUSINESSES
According to the Small Business Administration, the Paycheck Protection Program is designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses. If all employees are kept on payroll for eight weeks, the SBA will forgive the portion of the loans used for payroll, rent, mortgage interest or utilities. Up to 100 percent of the loan is forgivable.
Small Business Loans
Generally, businesses with 500 employees or fewer are eligible for Small Business Administration emergency grants and the forgivable loan program. For guidance on applying, go here.
Delaying Payment of Employer Payroll Taxes
The CARES Act allows some employers to defer payment of the employer share of the Social Security tax.
Employee Retention Credit
Some employers may be eligible to obtain a payroll tax credit for retaining employees during the pandemic. According to law firm Ogletree Deakins, Section 2301 of the CARES Act provides an employee retention credit for employers that are impacted due to the COVID-19 pandemic. This credit is in addition to the payroll tax credit provided under the Families First Coronavirus Response Act. Eligible employers providing emergency paid and sick leave to their employees affected by COVID-19 are allowed payroll tax credits.
PROVISIONS FOR INDIVIDUALS
According to the U.S. Senate Finance Committee, all U.S. residents or citizens with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for the full $1,200 ($2,400 married) rebate.
They are also eligible for an additional $500 per child. A typical family of four is eligible for a $3,400 recovery rebate. The provision allows for direct payments to individuals in two waves.
Unemployment Insurance Expansion
Federal Pandemic Unemployment Assistance in the amount of $600 per week may be provided to qualifying covered individuals in addition to any benefits currently offered by their state, as outlined in the CARES Act.
Retirement Plan Relief
There also are provisions in the plan to provide tax relief to retirement-plan participants impacted by COVID-19. Key provisions to COVID-19 qualifying participants include:
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