Coronavirus Aid, Relief, and Economic Security Act (CARES Act):
We hope everyone is continuing to do well and are keeping yourselves safe and healthy.
On Friday, March 27, 2020, the President signed H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or Act). The Act includes provisions both for tax relief relating to tax payments and current filings, as well as economic stimulus.
We have summarized some of the major provisions of the act. Please keep in mind this information is intended to serve as an overview of the law and is not intended as specific tax advice.
Special Rules for Required Minimum Distributions
Required minimum distributions for 2020 are waived for 2020 for all types of Defined Contribution plans and Individual Retirement Accounts. This also applies to required minimum distributions due in 2020, but attributable to 2019. This is a true waiver. You do not have to make up the distribution in a future year.
The following link discusses other changes to retirement accounts contained in the act:
Other major tax provisions of the act include:
The 2020 Recovery Rebate for Individuals
If the IRS has either your 2019 return, 2018 return, or Social Security statement, you may be eligible for a $1,200 payment ($2,400 if married filing jointly) PLUS $500 for each child under the age of 17. Phase outs apply to the recovery rebates and you need to have provided a valid social security number for yourself, your spouse and any qualifying children on your tax returns. Those who are claimed as a dependent on another's tax return will not be receiving a payment.
Charitable Contribution Deduction
The act allows non-itemizing taxpayers to deduct up to $300 of cash contributions in 2020 and allows itemizing taxpayers to take charitable deductions on cash contributions in 2020 up to 100% of adjusted gross income.
Exclusion from Income of Employer Payment of Employee Student Loan Debt
An employer can pay up to $5,250 of an employee's student loan obligation and the $5,250 will not be taxable income to the employee.
The act also added some loan provisions for small business owners. We have provided the following links that describe these loan programs in greater detail. If you are interested, you should contact your banker for more details.
For more information about how the CARES Act can help your small business, check out The Small Business Owner’s Guide to the CARES Act from the U.S. Senate Committee on Business and Entrepreneurship, available at https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act
For assistance in applying for an available SBA loan, visit https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Please feel free to contact our office with any questions.
This information is updated as of March 30, 2020.