The Coronavirus Aid, Relief and Economic Security (CARES) Act passed last night by the U.S. Senate offers $2.2 trillion in assistance to help individuals and businesses during the COVID-19 crisis.
In addition to direct payments to most Americans that are expected to start within the next three weeks, the legislation provides $350 billion in aid to small businesses, as well as $500 billion in loans and other assistance to large companies and besieged states and cities.
It is important to note that the CARES Act has not yet been passed by the U.S. House of Representatives nor signed into law. Final action on the bill is expected tomorrow. We will update this article should any changes be made in the content.
Below are highlights of the legislation that impact businesses and individuals.
‘Recovery Rebates’ for Individuals
Depending on income level, taxpayers will receive a one-time “recovery rebate,” which is an advance refund of a 2020 tax credit. Individuals will receive $1,200 ($2,400 for joint filers) plus $500 for each qualifying child age 16 or under. The recovery rebate payments will be reduced and phased out for taxpayers with adjusted gross income of more than $150,000 (for joint filers), $112,500 (for heads of household) and $75,000 for other individuals.
The recovery rebate checks will be based on the adjusted gross income shown on your 2019 tax returns, or your 2018 tax returns if you have not yet filed for 2019. For Social Security recipients who did not file tax returns, the IRS will determine your eligibility for a recovery rebate based on your Form SSA-1099, Social Security Benefit Statement.
The credit is not available to individuals who can be claimed as a dependent by another taxpayer, or estates and trusts. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive. (continue reading)