The CARES Act Overview

July 01, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27th of this year, initiated a $2 trillion economic relief package for the American worker and business alike. According to the U.S. Department of the Treasury, "The CARES Act provides fast and direct economic assistance for American workers, families, and small businesses, and preserves jobs for our American industries." The package can broadly be broken into four main sections:

Assistance for American Workers and Families

Every American household should expect to receive $1,200 for each adult whose income was less than $75,000 (or $150,000 for joint filers) in their most recent tax filing year. Households with dependents under the age of 17 should expect to receive $500 per child, for a maximum of $3,400 as a family of four. In addition, all required minimum distributions from qualified retirement accounts such as IRA's are optional for the calendar year 2020.

Assistance for Small Business

The Paycheck Protection Program (PPP) allocates funds to small businesses for up to 24 weeks of payroll costs and utilities. These loans may be forgiven if properly allocated follow­ing SBA lending parameters.

Preserving Jobs for American Industry

The Employee Retention Credit offers a tax credit of up to a 50% credit on up to $10,000 of wages incurred from March 13th, 2020 to December 31st, 2020. The Payroll Tax Deferral permits employers and self-employed individuals alike to defer the employer share of the Social Security tax, which must be paid back within two years - half required by the end of 2021 and the second half by the end of 2022.

Assistance for State and Local Governments

Funds of $150 billion went out to support state and local governments for the purpose of combating the fiscal and monetary effects of Covid-19. Local Government, Transportation and Infrastructure, and Education programs all received funds to combat the lasting rami­fications of extended closures. The CARES Act is only one of several govern­mental responses to the unprecedented impacts of the Covid-19 virus and resulting economic shutdown. We have already spoken to many of you; as always please give us a call to discuss your unique situation.

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