CARES Act
- As of today, both the Senate and House have passed the
Coronavirus Aid, Relief, and Economic Security Act
providing a record $2.2 trillion economic relief package that the President is expected to sign. Preliminary highlights include:
- Direct payments of $1200 to eligible individuals, $2400 for married couples, and $500 per qualifying child (structured as advance tax refunds for the 2020 tax year)
- Individuals can claim up to $300 for cash charitable contributions even without itemizing, and claim an unlimited itemized deduction. Corporations can claim up to an increased AGI limitation of 25% for cash and food contributions
- Expanded federal unemployment benefits, in addition to any state benefits, to include independent contractors, self-employed and furloughed workers for an extended duration of 13 weeks
- Employer tax relief in the form of employee retention credits, payroll tax deferrals, 5-year carrybacks of net operating losses (NOLs), and loans and grants
- Re-establishment of the 15-year depreciable class life for qualified improvement property placed in service after 9/27/2017, allowing them to be deducted in the year incurred
HSA's and IRA's
- Health Savings and Individual Retirement account contribution deadlines for 2019 have now been
extended to July 15
. HSA funds are not required for COVID-19 diagnostic testing as most major health plan insurers are covering testing and/or treatment fees. For retirement plans, the new CARES Act waives the 10% penalty on early withdrawals up to $100,000 as well as all required minimum distributions for 2020.
New Employment Laws
- The
Families First Coronavirus Response Act
(FFCRA) applies to all public sector employers, and private employers with fewer than 500 employees. In general, it requires them to provide 80 hours of paid sick leave to employees quarantined by COVID-19. Additionally, the federal FMLA has been temporarily amended to the
Emergency Family and Medical Leave Expansion Act
to provide up to 10 weeks of paid leave for employees who are unable to work (or telework) to care for a child. Both laws include health insurance costs and provide employers with corresponding payroll tax credits for the paid leave. (Exemptions may apply for small businesses with less than 50 employees.) For new clarifications from the Department of Labor, click
here
.
People First Initiative
- The IRS has unveiled a new program which allows for postponing payments related to Installment Agreements and Offers in Compromise, as well as some collection efforts, beginning April 1 through July 15. Appeals will continue (without in-person meetings) and statutes of limitations will stay in effect. Click
here
for more details on the IRS website.
Many of these new laws and regulations will directly affect your
tax planning
, so stay in contact with your Tax Manager!
