On Friday, March 27th, the U.S. government passed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, aimed to stymie an economic downfall resulting from the Coronavirus. There are several significant portions in the bill which may benefit you: tax filers, retirees, and small business owners alike.
The first and most prominent aspect of the bill is the taxpayer relief that gets paid to each tax-filing American. You will receive a stimulus check in the amount of $1,200 for Single filers and $2,400 for Married File Jointly filers so long as your income is below $75,000 or $150,000, respectively. If you earn more than these amounts then your stimulus check is reduced by $50 for every $1,000 of income you have over these thresholds. Approximately 93% of tax filers are set to receive a stimulus check.
Retirees over the age of 70 are typically subject to the annual Required Minimum Distribution (RMD). The RMD for 2020 is suspended under Section 2203 of the act, meaning if the required amount is more than what you need to live on, you can avoid taking the forced distribution. This is a great opportunity to avoid paying unnecessary taxes and to allow your money to stay invested (don’t sell low!).
If you are a small business owner, pay special attention to the $377,000,000,000 (Billion!) earmarked for you. If you are experiencing cash flow difficulty as a result of the coronavirus, you may qualify for small business loans up to $10 million to cover payroll, rent, utilities, mortgage interest and other necessary business expenses, which may be forgiven. There are also payroll tax credits for qualifying businesses and there is an allowance to defer payroll taxes from March 27, 2020 until the end of 2021 and 2022.
To see how small businesses benefit from the CARES Act, please visit this link: Paycheck Protection Program FAQs for Small Businesses
To learn more about how the CARES Act benefits everyone, this article from kitces.com gives an excellent breakdown.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.
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