Key takeaways on what may impact you
Congress took swift and aggressive action by passing a giant stimulus bill late Wednesday night. The goal of the stimulus package is:
“Providing emergency assistance and health care response for individuals, families and businesses affected by the 2020 coronavirus pandemic.”
Below are some of the key take aways from the bill.
For Individuals:
- Direct payments of up to $1,200 for individuals and $2,400 for couples, with $500 added for every child, based on 2019 tax returns for those who filed them and 2018 information, if they have not. The benefit would start to phase out above $75,000 in income for individuals and $150,000 for couples, going away completely at the $99,000 and $198,000 thresholds. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable, means-tested benefit programs, such as Social Security. Treasury Secretary Steve Mnuchin stated that he would like the IRS to start these as direct deposits and hopes to have them to Americans within the next 3 weeks.
- Boost unemployment by up to $600 per week on top of what the state program pays for the next 4 months. This bill also expands coverage to self-employed and independent contractors.
- No required minimum distribution for 2020, they added this to the bill for those that do not need the withdrawal for this year. This is in hopes to recoup some of their recent losses they may have experienced in the stock market.
- Waiver of the 10% early withdrawal penalty. The CARES Act allows individuals to withdraw up to $100,000 penalty-free from their retirement accounts through the end of 2020. This provision will help individuals who experience financial hardships and disruptions due to COVID-19 to access their own money without penalty.
- Suspend federal student loan payments through Sept. 30 with no accrual of interest on those loans.
For Small Businesses
- Immediate approval of loans and potential for loan forgiveness: The bill creates a “paycheck protection program” for small employers, self-employed individuals, and “gig economy” workers, with $350 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
- Delay payroll tax for employers, requiring half of the deferred tax to be paid by the end of 2021 and the other half by the end of 2022.
- Hospitals and health care: The deal provides over $140 billion in appropriations to support the U.S. health system, $100 billion of which will be injected directly into hospitals. The rest will be dedicated to providing personal and protective equipment for health care workers, testing supplies, increased workforce and training, accelerated Medicare payments, and supporting the CDC, among other health investments.
- This bill also includes a tax credit for retaining employees, worth up to 50% of wages paid during the crisis, for businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year.
I wanted to touch on a few of the points in this bill that may be most applicable to you. Big corporations that have been hit hardest by the impact of the Coronavirus will also receive a portion of the funding in this bill. Throughout the week there has been many other additions to the bill to provide assistance to companies most affected. To see the full bill in you can click here.
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