Coronavirus (Covid-19) Small Business Guidance & Loan Resources Care Act 2020
Care Act Highlights $2.2 Trillion Dollar Relief Plan
CASH REBATES
- $1,200 per Individual plus $500 per qualifying Child.
- Phase-out of the rebates begins at $75,000 for Individuals ($150,000 for Joint Returns).
- The rebate is considered an advance tax refund against 2020 income taxes.
- Rebate amounts are based upon the Adjusted Gross Income (AGI) reported on the most recent tax return filed (2019 or 2018).
UNEMPLOYMENT
- Federal funding is ADDING $600 per week (for up to 4 months).
- It is also available to Independent Contractors, Self- Employed Individuals and Furloughed Workers.
- After state benefits expire, the Federal Government will fund up to 13 weeks of unemployment benefits.
PAYROLL TAX DEFERRAL
- Can defer the employer portion of the 6.2% Social Security tax on wages paid March 27, 2020 through December 31, 2020.
- 50% of the deferral must be paid by December 31, 2021 and the remaining 50% by December 31, 2022.
- This benefit is available to the Self-Employed as well, but only the employer portion can be deferred.
- CAN’T Defer these Payroll Taxes if you receive a Loan through the Paycheck Protection Program (see below).
RETIREMENT PLANS
- May take up to $100,000 in distributions without incurring the 10% early distribution tax if certain criteria are met.
- Federal income tax on the distributions can be spread over 3 years, beginning with 2020.
- If the distribution is repaid into the Retirement Plan within 3 years, there are no Federal taxes (any taxes paid are eligible to be refunded).
- Retirement Loans – maximum amount is doubled (maximum loan is $100,000).
STUDENT LOANS
- Payments of principal and interest for certain Federal student loans are suspended through September 30, 2020.
FEDERALLY BACKED MORTGAGES
- Borrowers may submit a forbearance request if they are experiencing financial hardship.
- Lenders must grant the request without penalties, fees, or interest (beyond what would be due if no payments had been missed) for up to 180 days (subject to another 180-day extension at the borrower’s request).
- A foreclosure action is prohibited for 60 days beginning March 18, 2020.
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Coronavirus (Covid-19) Small Business Guidance & Loan Resources Care Act 2020
SBA PAYCHECK PROTECTION PROGRAM (PPP)
- Available on a first-come, first-served basis to Small Businesses and Sole Proprietorships beginning April 3, 2020.
- Independent Contractors and the Self-Employed must wait to apply until April 10, 2020.
- All $349 Billion is expected to be taken FAST, within days.
- Loan Amount is based upon Payroll Costs x 2.5 months.
- Cash can be received as soon as 24 hours after the application is made.
- No Collateral or Personal Guarantees are required.
- Loan can be forgiven (completely or partially) if used towards Payroll Costs, Rent, Utilities and Mortgage Interest over the following 8 weeks.
- Payroll costs must account for at least 75% of the forgiven amount.
- Amount forgiven is a non-taxable canceled indebtedness.
- Loan interest rate is 1.0% with a 2-year term (no interest is due if forgiven in 60-days).
- Payments are deferred for 6-months.
- No fees to take out the loan.
SBA ECONOMIC INJURY DISASTER LOAN (EIDL)
- Get a quick advance (grant) of up to $10,000 to cover immediate payroll, mortgage, rent and other specified expenses.
- Can get a loan for up to $2 Million to use on payroll and other defined operating expenses.
NET OPERATING LOSSES (NOLS)
- NOLs incurred in 2018, 2019 and 2020 can now be carried back 5-years.
Helpful Links and Articles to Review
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