Due to the ongoing pandemic, many businesses have closed, some employees have been laid off, and the financial future of many is up in the air. As we all try to get accustomed to our new normal, the federal government took action. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law.
The Act’s purpose is to “To provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.”
Here are some key points of the new legislation that may affect your clients:
- Direct payments to individuals will be forthcoming, up to $1,200 for each individual, plus $500 for each child. If your client’s only income is Supplemental Security Income, they may not file a tax return. Individuals need to file a 2018 or 2019 tax return in order to receive their direct payment.
- If your client has lost their job, they could now get a boost in their unemployment compensation. The new act provides additional funds for the unemployment program to account for the surge in claims, and also gives recipients an additional $600 per week for up to four months, above and beyond their usual state benefits.
- The rule that Required Minimum Distributions (RMDs) from IRAs and 401k plans must be taken at age 72 are now suspended.
- If your client is facing an eviction, there is good news. The act prohibits foreclosures on all federally-backed mortgage loans until May 16, 2020. Also, an eviction proceeding cannot be initiated by a landlord whose mortgage is insured by HUD, Freddie Mac, Fannie Mae, the rural housing voucher program, or the Violence Against Women Act of 1994 for 120 days, beginning on March 27.
- Additional resources for Medicaid’s Money Follows the Person and spousal impoverishment protections are given, funding those programs until November 30, 2020. The act also permits state Medicaid programs to pay for certain caregivers while recipients are in the hospital.
And here are some key provisions of the new legislation that may affect your law firm:
- The government wants you to keep your business going. Employers with 500 or fewer employees that maintain their payroll can receive up to 8 weeks of cash assistance.
- The net operating loss rule of the Tax Cuts and Jobs Act has been lifted.
- You can delay the payment of a portion of your payroll taxes, if needed.
Most Americans breathed a sigh of relief at the passage of the CARES Act. The $2 trillion dollar stimulus package allows for individual stipends, relief for businesses, and appropriations for agencies such as Administration for Community Living, Centers for Medicare and Medicaid Services, and Supplemental Nutrition Assistance Program. Hopefully the goals of the Act will be fulfilled, those who need help will receive it, and the pandemic will soon come to an end.