See below video update for additional information about PPP Loan Forgiveness, including new information from the PPP Loan Forgiveness Application, Form 3508.
Check out today’s 15 minute coffee chat about the CARES Act, featuring Jaime Palmer with Central Bank of Boone County and Melinda McCubbin with Truman Wealth Advisors.
This COVID-19 update is to provide information about the recently passed Coronavirus Aid, Relief & Economic Security (CARES) Act, with respect to items affecting individual taxpayers and families. This $2 trillion economic stimulus act was signed into law March 27. The bill is unprecedented in scope and size. Additional guidance and regulations on this will be forthcoming.
Cash Payments (Recovery Rebates)
Cash payments will be distributed to eligible individuals and families: $1,200 will be sent to each individual (so $2,400 for a married couple), and $500 per child.
Eligible individuals are those with adjusted gross income of $75,000 (single) or $150,000 (married filing joint). Individuals with adjusted gross income over the thresholds may receive reduced payment amounts up to the adjusted gross income phase out limits of $99,000 (single) or $198,000 (married filing joint). Eligibility is determined based on the 2019 tax return that was filed. If the 2019 tax return has not been filed, the 2018 return will be used to determine eligibility. If neither 2018 nor 2019 has been filed, the Social Security records for 2019 will be used.
Payments will be deposited directly into the bank account shown on the filed tax return. If no information was provided, bank information will be able to be input into a Treasury Department web-based portal, so the individual can receive the payment more quickly (instead of waiting to receive a check). Be aware of potential COVID-19 scams to obtain your bank information – the IRS will not call you!
An individual who is ineligible in 2018, but who becomes eligible in 2019, may want to expedite their tax return filing for 2019. Any taxpayer that has not filed 2018 nor 2019 will want to file, and provide direct deposit information on the filed return, in order to expedite receiving their cash payment. These payments will be available through the rest of 2020.
The act provides an expansion of unemployment benefits including:
- Adding $600 per week to existing state unemployment benefits being received (up to four months)
- Waiving the waiting period for unemployment
- Providing 13 additional weeks of Federal benefits, if the state benefits run out
- Expands payment eligibility to those not traditionally eligible, including self-employed individuals, independent contractors, and others
- Temporary financing of short-term compensation programs
The 10% penalty on early distributions from qualified retirement plans for COVID-19 related purposes, up to $100,000, for 2020 will be waived. In addition, the withdrawal will not be taxed if it is repaid within three years or it will be taxed over three years.
The required minimum distributions for 2020 are temporarily waived.
Taxpayers who do not itemize may be eligible to have an above the line deduction for up to $300 for cash (not stock) donations to charities.
For taxpayers who itemize, the 60% limit on charitable deductions is suspended for 2020.
This was a massive piece of legislation. Be on the lookout for more guidance. If you need any assistance in navigating any of this please let me know.