On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became the third major piece of legislation passed to address the COVID-19 outbreak. The Act contains more than $2 trillion of spending and has a number of provisions that will impact individuals and businesses.
Items Impacting Individuals:
Paycheck Protection Program (for individuals):
- Single tax filers will receive up to $1,200. This amount begins to phase out for those with Adjusted Gross Income (AGI) above $75,000 and will phase out entirely at $99,000
- Married tax filers will receive up to $2,400. This amount begins to phase out for those with AGIs above $150,000 and completely phase out at $198,000M.
- Individuals and married couples are eligible for $500 payments for each qualifying child 16 years or younger. The AGI phase-outs also apply to the qualifying child payments, meaning those over the thresholds above are not eligible for these payments.
Expanded Unemployment Benefits – Individuals filing for unemployment will be eligible for their states’ unemployment benefits and up to an additional $600 of additional unemployment insurance benefits.
Penalties Waived For Certain Retirement Account Withdrawals – Individuals in need of funds for certain COVID-19 reasons will be able to withdraw funds from their retirement accounts without paying a 10% early withdrawal penalty (state and federal taxes may still apply).
Items Impacting Businesses:
- Paycheck Protection Program – Loans for employers with fewer than 500 employees.
- Payroll Tax Deferral—Businesses can delay submitting the employer's share of Old-Age, Survivors, and Disability Insurance Tax (Social Security) – which is 6.2% of wages – between March 27, 2020 and December 31, 2020. Half of these payments must be submitted by December 31, 2021 and the remainder by December 31, 2022.