The Coronavirus Aid, Relief, and Economic Security Act is now law. This historic and sweeping legislation was created to help keep workers paid and employed, allows businesses to remain operational and makes necessary health care system enhancements to stabilize the economy.
We have compiled key highlights of the provisions of The CARES Act below, in particular the major components that may apply to you. For a complete review of the Act, we have attached a PDF to this post for your further review.
Individual Assistance – 2020 recovery rebates for individuals: All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work eligible social security number, are eligible for the full $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child.
Retirement Assistance – Plan withdrawals and loan relief: The proposal would provide tax relief for retirement plan and IRA “coronavirus-related distributions” taken by individuals on or after January 1, 2020 and before December 31, 2020. Employers would be permitted, but not required, to make available distributions described above and accept any repayments. This special tax treatment would be limited to aggregate distributions of $100,000.
Small Business Assistance – Paycheck Protection Program: The measure would let small businesses, nonprofits, and individuals seek loans through the Small Business Administration’s (SBA) 7(a) loan program. The measure would authorize $349 billion in total 7(a) lending from February 15, 2020 through June 30, 2020. It would also provide $349 billion for the SBA to fully guarantee loans under the new program, compared with a 75% or 85% guarantee for standard 7(a) loans.
We cannot provide you with business or tax advice, but we see no reason if you meet the above criteria that you would be ineligible to receive a loan. We suggest that you consult with your tax attorney before proceeding in the loan process.
Please continue to expect ongoing insights from our office during this time. We will continue to update you and provide clarification regarding this particular act, as well as our ongoing investment/market economic communications.
Thank you for your business and trust.