The CARES Act is the largest emergency aid package in US history, providing $2 trillion to individuals and small businesses. Here's what that looks like.
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The Coronavirus Aid, Relief and Economic Security (CARES) Act recently signed into law is the largest emergency aid package in US history and will provide $2 trillion to individuals and businesses during this uncertain time. According to the Tax Policy Center, about 90% of Americans will receive money under this act.
Stimulus payment amounts for individuals and families are as follows:
Payments begin to phase out at certain adjusted gross income (AGI) levels based on a taxpayer’s 2019 tax return if they’ve already filed and their 2018 tax return if they haven’t filed yet.
Singles - Begins at $75,000, phases out completely at $99,000
Head of household - Begins at $112,500, phases out completely at $136,500
Couples (with no children) - Begins at $150,000, phases out completely at $198,000
Children - No limit to how many children under age 17 a parent can receive $500 for.*
For every $100 above income thresholds, the amount the taxpayer receives will decrease by $5.
*Note: A couple whose AGI is more than $198,000 and has children may still receive some money. But for every $1,000 above $198,000, they'll receive $50 less. For example, if a couple's AGI is $200,000 and they have 2 children, that puts them $2,000 above the income phaseout level so they'll receive $100 less from the child rebate. Instead of $1,000 ($500 per child), they will receive $900.
Still not sure how much money you'll receive? Check out this stimulus payment calculator from Nerd Wallet.
US Treasury Secretary, Steven Mnuchin, said stimulus payments will start going out 3 weeks after the bill passed, but some speculate it could be months for certain taxpayers. Those who selected direct deposit for their tax return will likely receive their money sooner than those who opted to receive their refund by mail. However, the IRS will also be offering an online portal to those taxpayers who opted to receive their refund by mail to provide their banking information.
The CARES Act specifically outlines the Paycheck Protection Program, a forgivable loan program that allows small businesses to get cash qwhen uickly and incentivizes them to not lay off employees.
Note: As of April 24, 2020, an additional $310 billion was allocated to help small businesses under the Paycheck Protection Program and Healthcare Enhancement Act. $60 billion is specifically set aside for small- and medium-sized community banks, credit unions, and lending companies.
Who qualifies for a forgivable loan?
Businesses with 500 or fewer employees
How much are the loans for?
Loan amounts for established businesses:
Loan amounts for new and seasonal businesses:
What is the interest rate?
1% fixed rate
When can businesses apply?
April 3 for small businesses and sole proprietors
April 10 for self-employed individuals and independent contractors
How can businesses apply?
Businesses can apply through the following:
What qualifications does a business have to meet for their loan to be forgiven?
The loan should be used to pay for the following expenses over an 8 week period after receiving the loan:
Forgiveness is reduced if a business decreases full-time employee headcount or if they decrease wages by more than 25% for any employee who makes less than $100,000 in 2019.
When do businesses have to start paying loan interest?
Payments are deferred 6 months, but interest will accrue over that time.
When are these loans due?
In 2 years.
The law sets aside $60 billion for small- and medium-sized community banks and credit unions and less traditional lending companies that are SBA-approved.
Looking for more information about small business relief? Check out 5 Ways Businesses Can Maximize Cash Flow Under the CARES Act.
Note: This information was up to date to the best of our knowledge at the time of publication. The IRS will be continuing to release guidance.
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