Stimulus "CARES Act": What you need to know
CARES Act H.R. 748
"Coronavirus Aid, Relief, and Economic Security Act"
The bill is on its way to be signed by the President.
State shall enter into and participate in an agreement with the Secretary of Labor.
Employees will get the amount determined under the state law PLUS an additional $600 "Federal Pandemic Unemployment Compensation" – Weekly compensation.
State will get reimbursed by the Federal Government.
- Recovery Rebates for individuals
Taxpayers will receive a tax credit within the next few weeks.
It is a credit against the tax for the taxable year 2020.
The amount of credit is: $1,200 for single or $2,400 married filing joint return + $500 per qualifying child
Phase out: starts $75k for single, $112,500 head of household, $150k joint return
Phase out 5% of the AGI above thresholds.
Example 1: Mr. A and Mrs. A file a joint return in 2018 and 2019. They receive W-2 income. In 2019, their adjusted gross income is $110,000. They will get immediately $2,400 as a tax credit. Later when they file their 2020 tax return (April 2021) they will pay their tax as computed for the fiscal year.
Example 2: Mr. Z is single and pay tax every year. In 2019 his adjusted gross income is $70,000. He will receive $1,200 as a credit against 2020 tax.
All individuals with SSN are concerned except non resident aliens, estate and trust
The credit is automatically sent on bank account on file after 1/1/2018.
Taxpayers will receive a notice from the Secretary within 15 days of the payment
The condition is to have filed a tax return in 2018. If not, you can file 2019 ASAP in order to receive the credit on your bank account.
- Individual Retirement Plan
IRC Section 401(a)(9): Annuity contracts subject to minimum distribution rules, the CARES Act changes the distribution rules for 2020
- Charitable contribution $300 allowed "above the line"
Also, corporations will be allowed to deduct 2020 charitable contribution 2020 deductible up to the maximum of 25% of taxable income over the amount of all other charitable contributions allowed
- Employee Retention Credit for Employers subject to Closure due to COVID-19
Credit employment tax 50% of qualified wages. Qualified wages for quarter for any employee not to exceed $10,000
The excess credit is refundable. The credit applies for the period beginning after 12/31/2019.
Eligible employers: engaged in trade or business in 2020 and is fully or partially suspended activity due to the virus + significant decline in gross receipt ie less than 50% for the same calendar quarter in the prior year.
Health expenses included in qualified wages.
- Limitation business interest Section 163(j) for 2019 and 2020 limit 50% of adjusted taxable income
- Credit Protection during the Pandemic
When the creditor makes am accusation with respect to 1 or more payments on a credit obligation or account of a consumer and the consul er respects the terms of the accommodation, the creditor report the credit obligation or account as current
- Mortgage loan
Borrower can request for forbearance of foreclosure up to 180 days no additional fees, no penalties, or interests. Borrower must show financial hardship. Ask your lender.
Foreclosure moratorium: related eviction delayed at least 60 days starting March 18, 2020
New qualified medical expenses
Long time overdue, the federal government allows taxpayer to deduct expenses related to Menstrual care products (naming tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital-tract secretions)