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CARES Act and What it Means to You

Posted by Admin Posted on Apr 07 2020

On March 27th, the Coronavirus Aid, Relief, and Economic Security Act – simply known as the CARES Act -  was signed into law. Many portions of this unprecedented Act have been discussed so here are a few distinct highlights:

Stimulus checks – They are coming!
-    Individuals and married couples are eligible for stimulus checks of $1,200 and $2,400, respectively, plus an additional $500 per child under the age of 17.
-    There are income limitations to receive these stimulus checks but even if you did not qualify in 2019, you will be eligible for relief on your 2020 tax return if you would be eligible based upon your 2020 income. The income limitations are $75,000 for individuals and $150,000 for couples. For every $1,000 over the limit, the amount of the stimulus will be reduced by $50 until that number reaches zero.
-    If you have not filed your filed your 2019 return, the IRS will use the 2018 return to determine your eligibility. If you were not required to file a return due to Social Security being your only income, the IRS will not require you to file a return and will send out the stimulus checks.
-    A question commonly asked is “what if I owe the IRS? Will I still get my stimulus?”, the answer is YES, assuming you qualify.

Small Business Relief – SBA has offered a number of loan products available.
-    Paycheck Protection Program (also known as the PPP) is available through local lenders. This allow businesses with under 500 employees to access funds up to 2.5 times their monthly payroll costs to use for expenses such as payroll, rent, utilities, and interest on preexisting debt. A portion – if not all - of this loan will be forgivable if the funds are used for those purposes and your workforce is maintained.
-    Economic Injury Disaster Loan (also known as the EIDL) is available directly through SBA. You can find this link on their website. This loan is eligible for those without employees. Additionally, there are advances available for this loan in the form of emergency grants, but you have to fill out that application first.

Unemployment Benefits – Expended benefits.
-    Self-employed individuals and gig workers will be eligible for unemployment when they never were previously before. States have been slow on this implementation and vary on the ease of benefits, but they will be made available.
-    Additional funds on top of your state unemployment are available as well. Individuals may be eligible for an additional $600 per week of unemployment compensation.
-    Prior to the CARES Act, Massachusetts waived the one week waiting period for unemployment. Employees are also eligible for additional 13 weeks of unemployment benefits beyond the normal state maximums if they are still unemployed.

Retirement Plans – 2020 Changes.
-    No Required Minimum Distributions for 2020. It should be noted the age for RMDs moving forward will be 72 (instead of 70.5). If you have earned income, there is no longer an age limit for contributing to your IRA if you want to take advantage of the depressed stock market.
-    401K Loan limits have doubled, previously individuals were limited to $50,000 loans from their 401Ks are now eligible for $100,000 loan.
-    Withdrawal penalty for distributions by individuals under 59.5; if the withdrawal is for Coronavirus related purposes, there will be no penalty for withdrawals up to $100,000 (just make sure your trustee is aware!). These withdrawals will still be taxable, however. There is an option to spread the tax paid over three years OR to pay it back to the retirement account in three years and avoid the tax ramifications. The distributions must be made due to adverse financial consequences of COVID 19.

The CARES Act also offers additional features such as deferment of some payroll taxes, expanded Net Operating Loss options, increased ability for taxpayers to give to charities (including those that take the standard deduction), among other items. Other Acts such as the Families First Act offer payroll credits for certain businesses.

If you would like to learn more or have questions about how this may pertain to you, please reach us at 508-888-2000 or at

Stay safe.