Ginny Saville on CARES Act (Coronavirus Relief)

(editor's note - The following was written by Ginny Saville, founder/owner/operator of The Botany Bay stores in Central KY. You can also find The Botany Bay on Facebook and Instagram.)

=====
I spent my morning outlining my understanding of the important parts of CARES Act for regular people, small business owners and individuals. This is a long post, read if you are interested. It tweaked a lot of rules about retirement plan withdrawals and contributions, charitable contributions, and how businesses can deduct interest and losses, in addition to these things that affect the most of us.
For individuals

• $1200 single, $2400 married filing jointly; $500 for each child under 17. Phases out at income beginning at $75,000 single
• Check is an advance on 2020 income tax credit. so you are basically getting the refund now that you would normally get when you file you taxes. So remember, you get this, but it’s coming out of your refund on your 2020 return. For example, when you file 2020 return, if you have a $2000 refund coming, you already got $1200 so your new refund would be $800 instead. According to taxslayer “the stimulus checks are not taxable. However, if your 2020 income is much higher than your 2018 or 2019 income, you may be required to pay back a portion of the stimulus payment next year if your new income is above the threshold. This should be a small number of Americans.

Unemployment
• Federal added $600/week to state unemployment
• Expanded qualifications to include many previously not qualified. If you are unemployed you should check.

For businesses, a couple of choices.

PPP loan
• Under 500 employees
• Eligible for 2.5 times monthly payroll costs (some expenses and benefits included, some exclusions apply)
• No fees, no personal guarantee. Maximum loan term is 2 years, interest rate is .5%
• Proceeds must be used to cover payroll, mortgage, rent, utilities and debts. 75% of the expenses need to be payroll. If these guidelines are followed, debt is forgiven if employment is fully restored by June 30. Forgiveness will be limited if the conditions aren’t fully met.
• Loan forgiveness is not taxable income

EIDL loan
• Under 500 employees
• Government pays principal and interest for the first six months
• Emergency grant immediate advance up to $10,000. Advance does not have to be repaid even if the loan is denied.
• No personal guarantee required for loans under $200,000 this year.

Employee retention credit (under 100 employees)
• One year refundable credit against the employers share of 602% SS tax
• Applies if you are fully or partially shut down during any quarter, or gross receipts were less than 50% of same quarter 2019
• Credit will be 50% of qualified wages (capped at $10,000 per employee)
• Does not apply if you get the PPP loan

Deferral of payroll taxes
• 6.2% SS tax is deferred for the rest of 2020
• 50% due 12/31/21, the remaining half due 12/31/22
• Self employment tax gets same treatment
• Does not apply if you get the PPP loan

Special industry funding
• Hospitals
• Airlines and hospitality
• State and local governments
• All of the information on the loans and grants to large business is to be disclosed to the public.

I hope this helps some of you who are trying to make tough decisions. Ask your attorneys, accountants, and bankers for help and advice.