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CARES ACT COVID 19 UPDATE

CARES Act Update

On March 27, 2020 the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law. This piece of legislation includes many short and long term benefits for individuals and business.

Please note that the “CARES” act was passed very rapidly and guidance from the relevant agencies is being released on an ongoing basis and is subject to change without notice.

Stimulus Checks

The act provides for economic impact payments of $1,200 for individuals ($2,400 for joint filers) and $500 for each child under the age of 17. Individuals with adjusted gross income (“AGI”) up to $75,000 ($150,000 for joint filers) will be eligible to receive the payment. The amount of the payment will be reduced by $50 for every $1,000 of AGI above this income threshold.   Head of Household filers have an income limit of $112,500.

The IRS will use your 2019 tax return (or 2018, if you have not yet filed 2019) to determine your eligibility. If you are not eligible based on your 2019 tax return, you can receive the stimulus payment on your 2020 tax return. Currently it is not anticipated that the stimulus payments will need to be repaid on any future tax returns.

To verify or update your mailing address and bank info with the IRS and Treasury please visit the following IRS website (the IRS releasing ongoing updates to this page): https://www.irs.gov/coronavirus/economic-impact-payments

New Filing Deadline

All taxpayers who file and pay their Federal income taxes on April 15, 2020 have had their deadline automatically extended to July 15, 2020. This applies to individuals, trusts and C-corporations (not on a fiscal year-end), all of whom are considered taxpayers.

This automatic extension applies to both the filing and payment deadlines.

1st & 2nd Quarter Estimated Taxes (UPDATE AS OF 4/13/2020)

The deadline to pay your 1st and 2nd quarter estimated tax payments has also been moved to July 15, 2020.

SBA Loan Programs

There are a couple of loan programs available to businesses through the SBA. Some are also eligible to be forgiven. Both of the below programs are only available to employers with fewer than 500 employees.

Economic Injury Disaster Loan (“EIDL”) – This can be applied for through the SBA website. It provides up to $2 million in loans with interest rates of 3.75% (2.75% for non-profits). Up to $10,000 in emergency grants can be forgiven. The funds are to be used for payroll costs, group healthcare benefits, rent, utilities, mortgage interest, interest on other debt, working capital, inventory, equipment purchases, real estate payments and other operating expenses.

Payroll Protection Program (“PPP”) – This should be applied for through your bank (as long as they are an approved SBA lender). It provides employers 2.5 months of payroll costs up to $10 million. The loan is eligible for full forgiveness if funds are used to maintain payroll costs and for payment of interest on pre-existing mortgage obligations (secured by real or personal property), covered rent obligations and utility payments that were in place prior to February 15, 2020.

The amount of PPP received will be reduced by the amount of EDIL already received. Any EIDL already received can be refinanced into the PPP to be eligible for loan forgiveness.

Employee Retention Credit

This is a refundable tax credit equal to 50% of up to $10,000 in wages paid by an eligible employer.

To be eligible, the employer’s business must be fully or partially suspended by government due to COVID-19 during the calendar quarter. Alternatively, the employer’s gross receipts must be below 50% of the comparable quarter in 2019.

The credit will be received on the employer’s quarterly employment tax returns (Form 941) starting with the 2nd quarter 2020.

Additional information can be found here: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

 

The information given herein is taken from sources that G. A. Repple & Co. (GAR) and its advisors believe to be reliable but is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as GAR is not providing tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without GAR’s express prior written consent.

     
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