Understanding the CARES Act
On Friday, March 27, 2020, Congress passed the historic Coronavirus Aid, Relief and Economic Security (CARES) Act in response to the rippling effects of the novel coronavirus, COVID-19 across the United States. The CARES act was the third piece of major federal legislation that was passed in the wake of the global pandemic and the economic fallout that ensued. The first was the Families First Coronavirus Response Act, which addressed paid time off and expanded on securities included within the Family Medical Leave Act (FMLA). The second provided $8.3 billion in emergency public health funding. The CARES Act builds on the former two pieces of legislation by providing stronger support to both individuals and business owners, and included changes in tax policies.
The CARES Act Highlights:
- Expanded Unemployment Insurance (UI): This includes a $600 per week increase in benefits for up to four months. Also included: federal funding of UI benefits for those who would not normally qualify (i.e. self-employed, independent contractors, etc.). The federal government will also fund an additional 13 weeks of unemployment benefits, through December 31, 2020, after workers have used all state benefits. For more information on unemployment benefits and UI, click here.
- Paycheck Protection Program (PPP): $350 billion has been allocated to help small businesses (fewer than 500 employees) cover payroll expenses from February 15 to June 30, 2020. The initial funding has run dry. For full details on PPP, click here.
- Recovery Rebate (aka: the infamous “Stimulus Check”): We’re all probably most familiar with this inclusion, and probably paid the closest attention to it in the news. The CARES Act will provide $1200 refundable tax credit for individuals ($2,400 for joint filers) and taxpayers with children will receive an additional $500 for each child. The rebate gets smaller according to your most recently reported income (based off of most recent years’ taxes). For a full breakdown of what you can expect, click here.
- Federal Student Loan Forgiveness: Borrowers of student loans owned by the U.S. Department of Education for at least 60 days will get some relief at this time as well. Interest on all eligible loans will be waived for a period of six months between March 13, 2020 and September 30, 2020. Additionally, payments on eligible loans will be automatically suspended through Sept. 30th. Borrowers do not need to take any action to receive either of these benefits; lenders will make all changes automatically and they will be retroactive for the Mar. 13th start date. Borrowers can still choose to make payments over the next six months; any payments made will be applied to the principal balance of eligible loans. For more information, click here.
The CARES Act also includes…
- A variety of tax provisions for businesses including payroll tax credits, delaying Social Security payroll tax payments and more.
- $454 billion in emergency lending to businesses, states and cities through the U.S. Treasury’s Exchange Stabilization Fund.
- Health provisions to address the ongoing pandemic including supply shortages, diagnostic testing, support for healthcare providers, improvements to telehealth resources and more.
Let us know if you have questions!
If you have questions about the CARES Act and your eligibility of benefits, don’t hesitate to reach out to us! Our phone lines are open and the staff at Ferrante, Dill & Hisle, LLC stands ready to assist you with whatever questions you may have. Give us a call at (410) 535-6100 or send an email to firstname.lastname@example.org.