CARE Act & Other COVID Related Resources
CARE Act Information & Other Resources
On March 27, 2020 the Coronavirus Aid, Relief and Economic Security (CARES) Act became law and allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. The Paycheck Protection Program initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
Recovery rebates: The bill provides for payments to taxpayers — “recovery rebates” — which are being treated as advance refunds of a 2020 tax credit. Under this provision, individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive.
Payroll tax credit refunds: The bill provides for advance refunding of the payroll tax credits enacted last week in the Families First Coronavirus Response Act, P.L. 116-127. The credit for required paid sick leave and the credit for required paid family leave can be refunded in advance using forms and instructions the IRS will provide. The IRS is instructed to waive any penalties for failure to deposit payroll taxes under Sec. 3111(a) or 3221(a) if the failure was due to an anticipated payroll tax credit.
Payroll tax delay: The bill delays payment of 50% of 2020 employer payroll taxes until Dec. 31, 2021; the other 50% will be due Dec. 31, 2022. For self-employment taxes, 50% will not be due until those same dates. This deferral is not provided to employers receiving assistance through the Paycheck Protection Program.
Federal Income tax filing deadline extended to July 15th.
Employee retention credit: The bill creates an employee retention credit for employers that close due to the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. Eligible employers are employers who were carrying on a trade or business during 2020 and for which the operation of that business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak. Employers that have gross receipts that are less than 50% of their gross receipts for the same quarter in the prior year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter in the prior year. For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts. For employers with 100 or fewer employees, all wages paid qualify for the credit. This credit is not provided to employers receiving assistance through the Paycheck Protection Program.
Retirement plans: Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the Sec. 72(t) 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years. For these purposes, an eligible taxpayer is one who has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or who experiences adverse financial consequences from being quarantined, furloughed, or laid off, or who has had his or her work hours reduced, or who is unable to work due to lack of child care. Any resulting income inclusion can be taken over three years. The bill also allows loans of up to $100,000 from qualified plans, and repayment can be delayed. The bill temporarily suspends the required minimum distribution rules for 2020.
Charitable deductions: The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300). The bill also modifies the AGI limitations on charitable contributions for 2020, to 100% of AGI for individuals and 25% of taxable income for corporations. The bill also increases the food contribution limits to 25%.
Net operating losses: The bill temporarily repeals the 80% income limitation for net operating loss deductions for years beginning before 2021. For losses arising in 2018, 2019, and 2020, a five-year carryback is allowed (taxpayers can elect to forgo the carryback).
Excess loss limitations: The bill repeals the excess loss limitation added to the Code by the law known as the Tax Cuts and Jobs Act, which disallowed excess business losses of noncorporate taxpayers if the amount of the loss exceeds $250,000 ($500,000 for married taxpayers filing jointly).
Aside from the CARE act, there are additional changes and resources to be aware of:
The government has issued a 30 day moratorium on evictions. If you can’t pay rent, you will not be evicted during this time.
Mortgage companies have issued a 60 day moratorium on foreclosure process and many are offering to allow skip payments- adding the payments to the end of the loan. Also, in regards to your mortgages consumers should be aware that a late fee is usually not assessed until after 15 days past the payment date and not reported as late to credit agencies until after 30 days.
HUD has released mortgage payment relief options for single-family homeowners with FHA-insured mortgages who are experiencing financial hardship as a result of COVID-19. Effective immediately, borrowers with a financial hardship due to COVID-19 can defer or reduce mortgage payments for up to six months. This mandate on mortgage servicers is required under the federal CARES Act. The CARES Act also includes a partial claim option for homeowners, under which mortgage servicers advance funds on behalf of the homeowner, and those funds are converted to an interest-free subordinate mortgage that is not due until after the first mortgage is paid. To assist homeowners with FHA-insured mortgages in understanding these options, see this FHA Q&A for consumers.
Homeowners also may be able to use equity in their home via a reverse mortgage in order to eliminate the mortgage expense, receive cash sum or cash flow injection. If you would like to find out more about a reverse mortgage and if it’s right for you, please reach out to me and I’ll connect you with a great local lender.
The insurance commissioner has stated that until May 9th you can delay your payments without any fees or penalties on home and auto insurance policies, so talk to your insurance broker.
The dollar amount of unemployment issuance has increased significantly. I heard from one source that it may be increased as much as $900 a week, very considerable amount given that before it was only $600a week.
Xfinity has payment programs and won’t shut off individuals internet due to non-payment during this time and is also working with customers to increase their bandwidth while families are working from home.
PSE & other utility providers have stated they are also offering payment plans and won’t turn off services during this time.
Many banks and credit unions are offering 3 months of skip payments on loans and 0% interest on credit cards.
If you’re a property owner and looking to earn extra income, consider renting an RV space on https://upcloserv.com/.
CARE act FAQ from NAR: https://www.nar.realtor/political-advocacy/coronavirus-sba-cares-act-faqs?_cldee=ZnlsaWNpYXJlYWx0b3JAZ21haWwuY29t&recipientid=contact-863981e81c74448380847f21f84672ad-97b57cdc01544ef58e301381767c4cc8&utm_source=ClickDimensions&utm_medium=email&utm_campaign=Coronavirus&esid=d52c7c55-6f74-ea11-9c3d-00155d080808
Unincorporated Pierce County Small Business Relief Loan: https://www.piercecountywa.gov/6770/Emergency-Small-Business-Relief-Loan-Pro
Puyallup Sumner Chamber COVID Resource list: https://www.puyallupsumnerchamber.com/resource-list