Congress has passed three laws – Emergency Funding Bill (March 6); Families First Coronavirus Response Act (March 18) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act (March 26).
- Families First went into effect today (April 1) and requires paid leave for employees impacted by COVID-19. A poster must be posted explaining rights. As of today the Act applies to ALL employers except for a recent exemption of small employers (less than 50 employees) if an employee is off for childcare/school closing purposes. We have a link for more information: https://www.administerjustice.org/wp-content/uploads/2020/03/Notice-Families-First-Corornavirus-Response-Act-FFCRA_Poster_WH1422_Non-Federal.pdf and general guidelines: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave
- CARES ACT – Business and Individual Provisions
- Business – Sec. 1102 Paycheck Protection Program (PPP). Sec. 7(a) loan for two months payroll based on 2019 average (all payroll under $100,000) times 25%. Payroll includes employee tax portion and benefits. Loan is available this Friday for businesses with under 500 employees and applied for online through an SBA or FDIC bank. Available next Friday for solo practitioners and independent contractors. https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
- Business – Sec. 1106 Loan Forgiveness. Eight weeks of the loan will be forgiven if all employees maintained on payroll through June 30. Forgiveness amount equals payroll, rent, utilities and mortgage interest.
- Business – Sec. 1110 Emergency Economic Injury Disaster Loans (EIDL). Available for anyone with less than 500 employees. Fast, simple loan with an advance up to $10,000 within 3 days. The advance is not required to be repaid but will be offset by any PPP loan forgiveness.
- Business – Sec. 2301 Employee Retention Credit. 50% tax credit for qualified wages paid in 2020 with a quarter cap of $10,000 per employee. Credit includes health benefits. Cannot receive both PPP or credit from Families First and this provision. https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
- Business – Sec. 2302 Payroll Tax Deferral. 6.2% of payroll tax owed in 2020 can be deferred with half being paid by Dec. 2021 and half by Dec. 2022.
- Individual – Unemployment (Sec. 2102-2104). Increases unemployment payment amount by $600/week for up to 39 weeks for COVID-19 related unemployment. https://www2.illinois.gov/ides/Pages/default.aspx
- Individual – Rebates (Sec. 2201). The IRS extended the filing deadline for individuals and businesses. Based on last filed individual tax return will receive $1,200 ($2,400 couple) plus $500 for each dependent under 17 if individual earnings under $75,000 or joint return earnings under $150,000. If IRS has auto deposit information this will hit your bank account soon, otherwise mailed to address on the last return.
- Individual – 401k withdraws – Sec. 2202 allows for penalty free withdrawal from allowed accounts for COVID-19 reasons. No 10% penalty but will pay taxes on income.
- Individual – No required minimum distribution – Sec. 2203. If you are over 59 1/2 and had minimum distribution requirements from an account, those are waived for 2020.
- Individual – Donation credit – Sec. 2204 allows you to deduct from income $300 donated to a 501(c)(3) charity.
- Individual – Increased charitable giving limitations – Sec. 2205 removes the previous 60% of income limitation on giving for individuals and increases the contribution for businesses to 25%.
- Individual – Mortgage relief – Sec. 4022-4024. If you are unable to make your mortgage payment because of COVID-19 hardship you may skip payments for 60 days. You can receive 30 day extensions up to 180 days total. The law also puts a moratorium on evictions (leases or foreclosures). Rent must still be paid when due. Section 2 of Illinois Shelter in Place Executive Order contains the same moratorium on evictions.
More details and limitations apply to many of the items listed. Check regularly with linked sites for updates and with your own attorney or tax counsel. Additionally you can find out more information on individual provisions here – https://www.administerjustice.org/2020/03/28/cares-act/