As the novel coronavirus continues to hit the U.S. hard, the federal government is attempting to help Americans through new legislation designed at minimizing the economic impact of the required business closures around the states. The first economic aid bill, called the Families First Coronavirus Response Act, or FFCRA, was designed to help individuals and small businesses get the sick and family leave time off that they need. Similarly, the new bill, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, is meant to go a step further in assisting Americans. It includes financial help for individuals, small businesses, and big businesses.
In this guide, we'll go over the most important provisions of the CARES Act that will be relevant for most Americans, including individuals and small business owners.
Please be advised that nothing in this guide should be construed as legal advice. Instead, it should be taken as informational only.
While the FFCRA was designed to help Americans take the time off they need to care for themselves and their families, the CARES Act is designed to stimulate the economy more directly by providing financial assistance and economic breaks for individuals and businesses. It also added certain things to the FFCRA to make receiving aid easier.
Additionally, one often discussed provision in the CARES Act provides direct cash payments to eligible Americans.
Overall, the CARES Act is a massive economic stimulus package designed to ease the financial burden people are facing due to the novel coronavirus.
Final takeaway: The CARES Act was passed by the government to help individuals, small businesses, and big businesses.
The CARES Act contains several important provisions for Americans and their families. Here, we'll discuss the most important things to know about these targeted relief efforts.
The CARES Act provides for cash payments of up to $1,200 per person, $2,400 per married couple, and $500 per child for eligible Americans. Eligibility does not hinge on employment status, but rather, on income based on the 2018 or 2019 tax year. At above $75,000 of taxable income for individuals or $150,00 for married couples, the direct payments begin to get phased out.
The usual April 15 tax deadline has been pushed back to July 15, to make it easier for Americans to keep as much of their income as possible right now. However, the government encourages anyone who may be getting a refund to go ahead and file their taxes now.
Many Americans may not be eligible for their usual unemployment insurance benefits (or they may have used up their benefits and still need more assistance). Because of this, the government is opening up federal unemployment insurance benefits and providing extra funding for states to provide unemployment benefits to their citizens.
For Americans with retirement accounts, there are often penalties to withdraw funds early. The CARES Act has temporarily suspended those penalties for withdrawals of up to $100,000. This suspension will stay in place through the end of the 2020 year. In this way, individuals that may need extra funds will be able to pull them from their retirement accounts without also paying a hefty penalty.
Another provision in the CARES Act provides assistance to individuals over the age of 72 who would otherwise have to take a minimum required distribution from their retirement account. In this way, if the money is not needed, those older individuals can keep the money in their accounts to give the market time to recover and ensure they maintain as much of their savings as possible.
Final takeaway: The CARES Act provides direct cash payments, unemployment benefits, a push on the tax filing deadline, and retirement account adjustments to help Americans get and keep the money that they need.
Just like the CARES Act helps individuals and families, it also has certain provisions in place for small businesses.
While the FFCRA allowed employers to recover the money they paid out to employees needing sick or family time off, it did so in the form of tax credits. Many employers, however, need access to that money now. Therefore, the CARES Act includes a provision to allow small business employers to get advance refunding of the funds they need in a shorter timeframe.
The CARES Act provides several different options for small business loans. Not only that, but one of the loans offered under the new act is forgivable, if the small business spends the funds on payroll, rent or mortgage payments, and utilities. This part of the Act provides an incentive for employers to retain employees, as the funds are forgiven based on employee retention.
Businesses can also take advantage of the pushed tax deadline and not file their taxes until July 15. They are also permitted to delay the payment of their payroll tax.
Businesses that rehire employees who were laid off from the month of March onwards can get tax credits and additional loan forgiveness, as an incentive to revert back to their pre-COVID-19 workforce, if possible.
Final takeaway: The CARES Act provides loans and incentives to small businesses to help fund any operational difficulties they might be facing due to COVID-19.
The CARES Act adds a $300 above-the-line tax deduction to incentivize individuals to continue to give to nonprofits, who have also been hit by the COVID-19 pandemic.
The CARES Act includes $500 billion worth of loans to businesses and states whose operations are in trouble due to the economic fall out from the novel coronavirus.
Final takeaway: The CARES Act also considers nonprofits and big businesses, providing some support to those organizations.
The FFCRA and CARES Act aren't the only bills meant to tackle the coronavirus economic crisis. In fact, the federal government may be working on another aid package already, and several members of Congress have introduced additional, specific legislation to help ease Americans' economic burden.
The CARE Act contains a lot of helpful provisions for individuals, small businesses, and big businesses. The FFCRA focused on providing the necessary sick and family leave many Americans are needing, while the CARES Act focuses on providing direct financial support in as many ways as possible. Many Americans have already begun receiving their stimulus checks.
It's important to understand the details of this new law to get the most out of it. Hopefully, this guide has been helpful and informative.
About the Author: Anjali Nowakowski is a Legal Templates Programmer at Wonder.Legal and is based in the U.S.A.