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Tax Relief and Small Business Impact in Coronavirus Response Senate Bill

By March 21, 2020January 29th, 2024No Comments

Thank you for adjusting with us as we’ve temporarily altered our working situation to adhere to recommendations from national, state and local leaders and health professionals. Your health and the health of our employees is a primary concern. For the time being, we are working remotely to minimize any interaction with staff and clients. However, we are remaining in constant virtual contact to continue servicing our clients in the most efficient, professional, and safest ways possible.

As you are all well aware, the ongoing pandemic happening in our country and around the world involving COVID-19 has caused quite an interruption in daily life, as well as our local, federal, and worldwide economy. In response to this, Congress has been working on multiple relief bills for the American people.

We are emailing you to provide some insight, as well as to inform you of some potential relief that is being proposed in these bills. We are here to help guide you through these uncharted financial times. The Senate recently introduced a 247-page bill which is being called the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act). Although it is currently only a proposed bill, we felt that the news warranted a summary of the highlights for our clients, as it provides a lot of 2019 tax filing season information and changes, as well as many relief items that will directly affect you.

Here are the highlights:

  • Stimulus Checks: Checks will vary in amount according to your 2018 adjusted gross income (AGI). If you need to know your 2018 AGI or would like a copy of your 2018 (or any year for that matter) tax returns, please reach out to us at the contact information at the bottom of this bulletin. It appears that checks will be up to $1,200 per adult, plus $500 per child. The amount of the checks will begin to phase out at AGI levels of $75,000 for single taxpayers, and $150,000 for joint taxpayers.
  • 2019 Tax Filing & Payment Deadline Extension: It was announced earlier in the week that the tax payment deadline would be pushed back 90 days, from April 15th to July 15th. While this provided relief, it also created a lot of confusion. As this bill was being announced, Secretary of the Treasury Steve Mnuchin tweeted that the IRS would be moving tax day completely to July 15th. So this part of the bill may be changed through the back and forth of passing it, this part has been basically enacted.
  • Loans for Small Businesses Experiencing Interruptions: This bill defines small businesses as those that have under 500 employees. It also gives these small businesses the eligibility to receive a loan of up to $10 million through the Small Business Act. Loans appear to be targeted for payroll support, paying sick and medical pay, and costs for maintaining health care benefits. There are also indications that if the loans are used for payroll could be forgiven if businesses retain their employees through June 30th of this year.
  • Retirement Accounts: The bill also provides relief for taxpayers who dip into their retirement accounts for coronavirus related distributions of up to $100,000. You will also be allowed to repay the distributions back into your retirement accounts to replenish any withdrawals.
  • Charitable Giving: Congress is also making some changes to charitable giving rules. Charitable contributions will possibly be moving “above the line”, which is to say that they will be deductible regardless of if a taxpayer itemizes or takes the standard deduction.
  • Corporate Tax Payment Push Back: While the April 15th deadline being pushed back for individuals is intended to help the American people individually, it did not address corporate filing and payment dates. This bill, however, introduces an extension of time to pay estimates (for C Corporations), and payroll taxes through October 15th.
  • Net Operating Losses: Net operating losses will now be allowed to be carried back to 2018 or carried forward. This part of the bill will have many limitations and restrictions, but we do think that it could be very powerful in getting economic stimulus to taxpayers that are most affected by the possibly coming economic slowdown.
  • Loans and Loan Guarantees: This bill includes over $200,000,000,000 in loans and loan guarantees for the most hard-hit sectors of business. These loans will have strict rules on what the funds can be used for.
  • COVID-19 Treatment: The bill would require health insurance plans to cover a lot of the COVID-19 related expenses.
  • Medical Expenses for Deduction Expanded: The definition of medical expenses for deductions in the tax law would be expanded to include many over the counter products.
  • Student Expenses: There are many parts of the bill that apply to student loans. The details are quite complicated, and as this is just a proposed bill currently, we will spare you the intricate details, but colleges and universities will be allowed to give “emergency financial aid grants”. This part of the bill appears to be aimed at students who were forced to pull out of school due to COVID-19. Student loan payments are also going to be suspended for 3 months, with no accumulation of additional interest.

Again, this is only a proposed bill. However, it included so much information that we found pertinent to our client base that we felt the need to communicate these highlights. Given the rapid pace within the government, all of the above is subject to change. Rest assured we are here to help guide you through these times. Please feel free to reach out to us with any questions or concerns.

As clients, friends, and family, we hope you will stay safe and positive in this time of uncertainty.