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CARES Act Stimulus Programs

Digital Collage by Alana Burman with components courtesy of Pexels.com

What is the CARES Act?

The Coronavirus Aid, Relief and Economic Security (CARES) Act is a $2 trillion coronavirus relief package passed by Congress and signed into law by President Donald Trump on Friday, March 27, 2020. In addition to supports for businesses and small business owners, one of the most talked about aspects of the CARES Act is the cash payments that will be made to many Americans.

What are the Stimulus Checks?

The recovery rebates – more commonly known as stimulus checks – are cash payments sent to taxpayers by the IRS and are expected in mid-April. The money is officially referred to as “economic impact payment[s]” and, according to the IRS, will be “distributed automatically, with no action required for most people. However, some taxpayers who typically do not file returns will need to submit a simple tax return to receive [theirs].”

Who gets one?

According to IRS.gov, there is the following eligibility for a payment:

  • Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the $1,200
  • Filers with income above those amounts means the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
  • Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
  • Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return.
  • Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.

How To Get Your Rebate

  • If you have not already, make sure you file your taxes – the deadline for which has been pushed from April 15 to July 15.
  • Enter your direct deposit info onto the IRS’s to be developed portal.
  • Keep an eye out for a letter from the IRS in the mail.

Support for Small Businesses

Employee Retention Credit

The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. You can get immediate access to the credit by reducing the employment tax deposits you are otherwise required to make. Also, if your employment tax deposits are not sufficient to cover the credit, you may get an advance payment from the IRS.

The refundable credit is capped at $5,000 per employee and applies against certain employment taxes on wages paid to all employees. Eligible employers can reduce federal employment tax deposits in anticipation of the credit. They can also request an advance of the employee retention credit for any amounts not covered by the reduction in deposits.

Families First Coronavirus Response Act

The Families First Coronavirus Response Act provides all American businesses with fewer than 500 employees funds for employee paid leave, either for the employee’s own health needs or to care for family members. There are also tax credits available for the provision of Sick and Family Leave.

Paycheck Protection Program

The Paycheck Protection Program is specifically designed to help small businesses keep their workforce employed. Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program.

The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.

Loan Terms & Conditions

  • Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
  • Maximum loan amounts up to $1 million
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
  • All loans under this program will have the following identical features:
    • Interest rate of 0.5%
    • Maturity of 2 years
    • First payment deferred for six months
    • 100% guarantee by SBA
    • No collateral
    • No personal guarantees
    • No borrower or lender fees payable to SBA

SBA’s announcement comes on the heels of a series of steps taken by the Agency since the President’s Emergency Declaration to expeditiously provide capital to financially distressed businesses affected by the Coronavirus (COVID-19) pandemic. Since March 17, SBA has taken the following steps:

Categories: Budget, Capitol Hill, COVID-19, Finance, Labor, Tax