The Coronavirus Aid, Relief, and Economic Security Act (CARES)
What is CARES?
CARES is a stimulus package intended to provide relief to individuals and businesses as a response to the impact of the COVID-19 pandemic on the U.S. economy. Provisions of the bill include tax credits, rebates, loans, and the postponement of certain identified tax payments.
Information provided by: Hoskins and Company
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I. Paycheck Protection Program
a. Cash flow assistance to small business with 500 employees or fewer from the SBA
b. Low interest loans equivalent to 2.5x average monthly payroll costs or $10 million, whichever is less.
c. Meant to cover payroll costs, paid sick leave, supply-chain disruptions, employee salaries, health-insurance premiums, and mortgage payments.
d. If the employers maintain their payrolls until June, the portion of the loans used for payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven (i.e. the loan becomes a grant).
e. Reduction in headcount proportionately reduces the amount of loan forgiveness.
f. A similar program is available for companies with more than 500 employees through the Federal Reserve.
II. Employee retention credit
a. Refundable credit against payroll taxes (employer 6.2% OASDI).
b. Credit amount of 50% of up to $10,000 in wages paid per employee (maximum credit
c. $5,000 per employee)
d. Applies to companies affected by COVID-19 shutdowns or 50% reduction in revenues from same calendar quarter in the prior year.
III. Delay of payment of employer payroll taxes
a. Allows employers (and self-employed individuals) to defer payment of the 6.2 percent employer-side Social Security payroll tax, effective for wages paid between the date of enactment and December 31, 2020.
b. Payment ultimately would be due in equal parts on December 31, 2021, and December 31, 2022.
IV. Net Operating Loss (NOL) carryback rules reinstated and expanded
a. NOLs from tax years 2018, 2019, 2020 can be carried back 5 years to claim refunds from taxable years
V. Due date for Federal income tax returns and payments due April 15, 2020 automatically postponed to July 15, 2020.
VI. Recovery Rebates for individuals
a. Direct cash relief of $1,200 for single taxpayers and $2,400 for joint filers, increased by
$500 for every qualifying child.
b. Reduced for taxpayers with adjusted gross income above $75,000 (single-filers) and
$150,000 (joint filers); phased-out completely above $99,000 (single filers) and $198,000 (joint filers).
VII. Expansion of unemployment benefits
a.$1 billion of emergency funding to reduce eligibility requirements and increase access to unemployment benefits for individuals directly affected by COVID-19.
b. Requirements to search for work and to wait a week before receiving unemployment benefits are waived.
Vlll. Due date for Federal income tax returns and payments due April 15, 2020 automatically postponed to July 15, 2020
Stay healthy and be safe! We know that together we will get through this difficult and challenging time.