After extensive negotiations between the US House of Representatives, the US Senate, and the White House, an agreement was reached on a massive stimulus bill to address the financial and health care disruption resulting from the COVID-19 pandemic.
As of this writing, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by the Senate and is expected to be passed by the House. The mechanics, however, are still to be determined because most House members are currently in their home districts. President Donald Trump indicated he’ll sign the legislation.
The CARES Act includes support for the health care system to help provide needed treatment during the pandemic and financial assistance 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 them weather the pandemic. The legislation also expands unemployment benefits, including for self-employed and gig economy workers, and the ways the Small Business Administration (SBA) can help small businesses.
Here’s a brief overview of some of the CARES Act tax provisions that may affect you or your organization. Please note, it’s possible some provisions could change before the act is signed into law.
- Recovery rebates of up to $1,200 for singles, $1,200 for heads of households, and $2,400 for married couples filing jointly—plus $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 and Other Employers
- Retention tax credit for eligible employers that continue to pay employee wages while their operations are fully or partially suspended as a result of certain COVID-19-related government orders
- Deferral of the employer portion of payments of certain payroll taxes
- Modification of 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
We’re Here to Help
This is just a brief overview of the CARES Act. We’ll share additional details on the provisions that are likely most relevant to you or your organization in the coming days.
In the meantime, don’t hesitate to reach out to your Moss Adams professional with questions or concerns about your taxes or your individual financial or business situation. We’d be pleased to help you during this challenging time.
Note on COVID-19
During this unparalleled time, we’re closely monitoring the COVID-19 situation as it evolves so we can provide up-to-date guidance and support to help you combat uncertainty. For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: