I. Direct Payments
This is the part everyone is interested in. Each single person making $75,000 or less will receive a payment of $1200. This will gradually phase out up to a maximum of $99,000. Each married household making $150,000 or less will receive $2400. This will phase out up to a maximum of $198,000.
You qualify for these payments based only on your income level, not the source of the income. Self-employed? You qualify. Retired? You qualify. On disability? You qualify. No income at all? You qualify. Making a lot of money? No, you don’t qualify.
What do you have to do to get this money? Nothing. The IRS will be using our information on tax filings to send out the money. Watch your bank account and your mailbox. When will you get it? I don’t know, but April 6th is the date that’s been touted.
II. Expanded Unemployment Benefits
Those who have been laid off will file through the state for state benefits. IN ADDITION to the state amount, they will receive $600 per week from the federal government, and the one week waiting period is waived. An additional 13 weeks is added to the draw period up to 12/31/2020.
Self-employed people can apply for benefits. Independent contractors can file. People with limited work history can file. Even if you are only facing reduced hours or a reduced paycheck, you can file for a pro-rated benefit. EVERYBODY file!
Note these benefits apply to railroad people. If you’re not a railroad person, don’t ask. It’s a whole different system.
III. Required Minimum Distributions
NO RMDs this year. They’ve been waived. If you’ve already done this within the last 60 days, think about putting that money back.
IV. Retirement Accounts
You can take up to $100,000 out of your IRAs if you’re under 59 ½ and not have a 10% penalty. In addition, the tax due can be paid over the next 3 years. AND you have the option to put the money back in over the next 3 years. Note this withdrawal must be related to COV-19, but this is a broad definition.
Up to $300 in cash donations may be deducted from your 2020 income even if you don’t itemize. The limit on donations in relation to your income has been waived for now, so give away!
VI. Student Loans
Sorry, no debt relief in here, but there is still something for you. Employers can now pay $5250 of your student loans, and it will NOT be counted as income.
VII. Business Relief
A. A refundable payroll tax credit is available to employers for 50% of wages. This includes health benefits and is for March 13 through December 31. This is for companies whose operations have been fully or partially suspended or who have experienced more than a 50% drop in revenue compared to the same quarter last year.
B. Employers can defer their portion of the SS payment (6.2%) for 2 ½ years.
C. Net Operating Losses can now be carried back 5 years and can fully offset income.
D. Interest expense can be deducted for up to 50% of income for years 2019 and 2020.
E. Immediate write-off of any improvement to facilities.
Now, that’s the high points, and things are still in flux. We will update as we get more information and as the proposed bill becomes law. This is a great help to a lot of people. We expect more to be forthcoming.