April 1, 1920..Although the CARES Act is comprehensive and exhaustive, most Americans today want to know what it means to them, Much has been said regarding the stimulus checks that most Americans will be receiving. Well here it is in a nutshell. If your Adjusted Gross Income (per your last filed tax return) is below $75,000 for those who file as Single, $150,000 if Married Filing Jointly, or $112,500 if Head of Household, you will receive as a direct deposit into the bank account used to file your tax return, or you may enter it in a special IRS website, or the check will be mailed if an account number is not available, the sum of $1,200 per person. This does NOT apply to those who are claimed as dependents of other taxpayers, and if you did not earn enough to file a tax return AND collected Social Security benefits, you will receive a payment. Taxpayers with qualified children will receive an additional $500 for each child.
It is important to note that this is adjusted gross income (AGI), not “modified” AGI, meaning say an American living and working in a foreign country who had foreign earned income of $105,900 plus $75,000 of other income, totaling $180,900, but excluded $105,900 of the foreign earned income, is entitled to receive the full $1,200 rebate and it will be deposited to their bank account. Now that the bill was signed into law, it will take an act of Congress to amend the law to close that loophole.
The amount of the stimulus rebate gradually decreases as the adjusted gross income exceeds the limits stated above to the extent of $50 for every $1,000 above the limit. There are some interesting and important particularities, however. Anyone NOT receiving social security benefits who has not filed a tax return (possibly because they don’t earn enough to require a tax return) will not receive benefit checks until they file a tax return.
Other provisions are that any INCOME tax return that is normally due on April 15 is now extended to July 15, both regarding relief from filing and payment of tax due penalties (and interest). However if you had a child born in 2019 the rebate amount won’t increase for that $500 until the 2019 return is filed.
Also if a child was born at the end of 2019 outside the United States, and the parents did not come to the States to get a social security number for the child (U.S. foreign embassies stopped issuing social security numbers in 2017), and are now quarantined and prohibited from flying to the U.S., they also need to wait to file their 2019 tax return (extend until October 15?) or else they can’t get the stimulus rebate until next year after they file for 2020. OH, but WAIT, CONGRESS put a deadline for claiming the rebate until December 31, 2020. So you can’t wait until next year.
Federal emergency unemployment benefits are available for those who are both unemployed or partially unemployed due to the coronavirus. This includes self employed individuals.
Business employers that do not receive Small Business Interruption loans can take a 50% tax credit on the wages paid to employees from March 13 to December 31, 2020, up to a maximum of $5,000 credit per employee (applied to $10,000 of employee wages). To qualify, firms must be suspended due to government actions related to coronavirus or experience a 50 percent decline in gross receipts during a calendar quarter when compared to the same quarter in the previous year. For firms with 100 employees or more, the credit can only be applied to employees not able to do their duties due to a business suspension or a lack of business
Also federal employment payroll taxes will be deferred for 2020. Fifty percent of payroll tax payments for 2020 will be due in 2021, with the other 50% due in 2022.
Business operating losses for this year can be carried back for up to five years.
Excise taxes on alcohol used to produce hand sanitizer will be suspended for 2020.
The plan allows people to take special disbursements and loans from tax-advantaged retirement funds (IRA plans) of up to $100,000 without facing a tax penalty. It waives the required minimum distribution (RMD) rules for 401(k) plans and individual retirement accounts (IRAs) and the 10% penalty on early withdrawals up to $100,000 from 401(k)s. Account holders would be able to repay the distributions over the next three years and be allowed to make extra contributions for this purpose. These measures apply to anyone directly affected by the disease itself or who faces economic hardship as a result of the pandemic.
Unemployment Benefits: The stimulus plan extends both the eligibility and the benefit amounts for unemployment related to the current emergency. Eligibility for unemployment benefits is extended to those who would otherwise not qualify, if their loss of work is related to the Covid-19 pandemic. This includes contractors and the self-employed, those whose existing benefit has been exhausted, those only seeking part-time employment, those with insufficient employment history, or anyone who would otherwise not qualify. However, it specifically excepts those who have the ability to continue their job working remotely online or are already paid sick leave or other leave benefits due to the work interruption. The plan dramatically expands eligibility for unemployment benefits just as new unemployment claims are skyrocketing. Nearly everyone but remote online workers and those already on paid leave will be eligible. The plan extends the duration of regular unemployment benefits from the normal 26 weeks to as long as 39 weeks for affected workers. It extends payment of benefits also to the first week of unemployment, where not prohibited by state laws. It also funds a new Federal Pandemic Unemployment Compensation benefit of $600 per week on top of the regular unemployment benefit through the end of July 2020. For workers who remain employed but with reduced hours, the stimulus plan funds 100% of state short-term compensation benefits and provides incentives for states that do not have such benefits to implement them.
Although there are many more aspects to the CARES Act, these are some of the paramount provisions that the average American is concerned with.