2020-13: President signs stimulus bill - Spidell

2020-13: President signs stimulus bill


President signs stimulus bill (03-27-20)

The President has just signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, H.R. 748). In addition to the tax provisions we previously reported, the CARES Act provides for Payroll Protection loans of up to $10 million to COVID-19 impacted businesses. The loans:

  • Are guaranteed 100% by the Small Business Administration (no personal guarantees or collateral required);
  • Must be taken out between February 15, 2020, and June 30, 2020;
  • May be forgiven for amounts used to cover basic operating expenses such as payroll costs, rent and mortgage, and utilities for up to two months from the loan origination date (excluded from COD income); and
  • Have a maximum maturity rate of 10 years and 4% interest if not forgiven.

Also, in response to the questions we’ve had about the amounts of the stimulus checks individuals will receive, here is a helpful link to compute the payments:

www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php

For your reference, here is a list of CARES Act tax provisions:

  • Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) and will be “rapidly advanced;”
  • Deferral of 50% of an employers’ payroll tax deposits for 2020 (with 50% of deferred amount due by December 31, 2021, and 50% due by December 31, 2022);
  • A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;
  • The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;
  • A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;
  • Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);
  • A temporary waiver of RMD requirements in 2020;
  • Increased individual and corporate charitable contribution deductions for 2020;
  • The deferral of excess business loss limitations until 2021;
  • Deferral of an employer’s 2020 minimum contributions to its single-employer defined benefit pension plan until January 1, 2021;
  • An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;
  • An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;
  • The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and
  • A COD exclusion of small business Payroll Protection loans forgiven under the Act.

The full text of the CARES Act is available at:

www.congress.gov/bill/116th-congress/house-bill/748/text

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