The Economic Stimulus Package, CARES Act, aims to provide relief to individuals, businesses, and the economy in response to the grappling effects of COVID-19 to the U.S. Economy.
Note: The CARES Act is expected to be signed into law in the following days, following draft of the Bill and approval. Certain provisions below may change upon the actual passage. We will update the article as we receive the updated verbiage of the law.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by the Senate and the public is expecting for Congress to pass the bill meant to jumpstart the U.S. economy from the crippling effects of COVID-19.
After series of negotiations between the Congress, Senate, and the White House, a compromise was reached on the massive stimulus bill. The mechanics, however, are still to be finalized since members of the Congress are currently in their respective home districts. The bill is likely to be signed by the President himself.
Final iteration of the bill is built from the earlier versions of the CARES Act, intended to be the third round of White House’s support in the wake of the COVID-19 public health crisis. The proposed package significantly succeeds $8.3 billion worth of public health support associated with the Families First Coronavirus Response Act, or COVID-19 Relief Act.
The bill includes significant support for the healthcare system to provide necessary treatment and financial relief to state, local, tribal, and territorial governments as well as to private not-for-profits providing critical and essential services.
It also provides significant relief to individuals, businesses, state and local governments, health care organizations, and other employers to help these institutions recover.
The bill also expands unemployment benefits, including for self-employed and gig economy workers, and the ways the Small Business Administration (SBA) can help small businesses.
KEY PROVISIONS
An overview of the expected provisions of the CARES Act affecting businesses and individuals alike are as follows:
Individuals
- Rebates of maximum $1,200 for singles, $1,200 for heads of households, and $2,400 for married couples filing jointly—with additional $500 per qualifying child—subject to income-based phase-outs starting at $75,000, $122,500, and $150,000, respectively
- Waiver of the 10% penalty on COVID-19-related early distributions from IRAs, 401(k)s, and certain other retirement plans
- Waiver of required minimum distribution rules for IRAs, 401(k)s, and certain other retirement plans
- Expansion of charitable contribution tax deductions
- Exclusion for certain employer payments of student loans
Businesses
- Retention tax credit for qualified businesses continuing payment of payroll while experiencing full or partial disruption of operations as a result of certain COVID-19-related government orders
- Paycheck Protection Program, which is meant to help qualified small businesses (fewer than 500 employees) affected by the pandemic and economic downturn to make payroll and cover other expenses from February 15 to June 30
- Lending and grants for small businesses through the U.S. Treasury’s Exchange Stabilization Fund
- Deferral of the employer portion of payments of certain payroll taxes
- Modification of conditions surrounding net operating loss (NOL) and limitation on losses rules
- Modification of the deduction limitation on business interest
- Qualified improvement property technical correction, allowing qualifying interior improvements of buildings to be recovered faster
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We will continuously update you regarding evolving news surrounding legislative and administrative issuances dedicated to relieve the general public of the effects of COVID-19. Stay tuned with the advisory bulletin. For immediate clarifications, please contact us at [email protected] or discuss it with your Scrubbed professional.
Disclaimer
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. It is not intended to be relied upon as accounting*, tax, or other professional service. Please refer to your advisors for specific advice. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.