Benefits of the CARES Act for individuals

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A very quick summary of the biggest economic bill in history for businesses

The Coronavirus Aid, Relief, and Economic Security act – the CARES Act – is the largest economic bill in U.S. history and was designed to “provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.” Spanning close to 900 pages, the CARES Act builds upon earlier versions of federal government support and is the third such bill, coming shortly after the “Coronavirus Preparedness and Response Supplemental Appropriations Act” and the “Families First Coronavirus Response Act” were approved.

Here are a few highlights that might be of interest to business owners, but it’s important to remember that not all provisions of the CARES Act are available to every business, so conversations with your advisor is highly recommended.

Protecting paychecks

The Paycheck Protection Program offers loans to small businesses that are fully guaranteed by the federal government. The loans are designed to cover eight weeks of operating costs during the crisis – so that means covering payroll and the costs of rent, utilities, mortgage interest, etc. These loans may be fully forgiven so long as the business complies with the federal government rules.

Employee retention tax credit

A refundable payroll tax credit up to $5,000/employee. But in order to qualify, a business must have closed completely/partially, or revenues had to have declined by more than 50% relative to the same time last year.

Sick and family leave tax credits

Credits for sick and family leave costs for businesses with fewer than 500 employees. Businesses are eligible to receive refundable tax credits as are businesses with no employees (sole proprietors).

Deferral of social security taxes

Businesses can defer payment of the employer share of Social Security tax incurred from March 27th through December 31st, but the deferred taxes must be paid over two years.

It’s complicated

As a business owner, you’ll have choices to make when deciding which benefit to use. For example, a business cannot apply both the Paycheck Protection program and the employee retention tax credit. There are a lot of nuances within the CARES Act to think through. Talk to your financial professional.

Important Disclosure

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

This article was prepared by RSW Publishing.

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The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.

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