Recap on the CARES Act
The biggest stimulus package to ever be signed into law happened Friday, so I wanted to write a quick recap of some of the items that will affect many of my clients. This is not an exhaustive list by any means, but will give your average individual an understanding of how they might be able to benefit.
A joint tax filer will receive $2,400 and a single filer will receive $1,200, plus $500 for each qualifying child, as long as their income is under $150,000 for joint filers and $75,000 for single filers. There is a phase out, so if you are above these incomes then you may still be able to receive some.
Retirement Plan Distributions
For 2020 taxpayers can take up to $100,000 out of their retirement plans without a 10% penalty as long as it meets certain requirements (mainly for economic hardships caused by the virus).
For 2020 there is a $300 above the line charitable deduction for those people that don’t itemize. I hope that most people will try and take advantage of this, as a lot of non-profits are going to feel the long-term effects of depressed donations.
Required Minimum Distributions (RMDs)
The bill suspends RMDs for 2020, similar to what they did during the 2008 financial crisis.
Here are some things you may want to consider if you are a business owner:
SBA is providing loans for companies to basically keep people employed. If those loans are used for payroll, rent, utilities, etc. then it may turn into a grant. To read more about this program go to https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
If you already have an SBA 7(a) loan, then they are providing a loan relief program and may pay your interest and principal payments for 6 months. Talk to your loan servicer to see if you qualify.
Again, this is not a comprehensive list and to learn more you can look up the CARES Act or go to sba.gov.