COVID-19: CARES Act Passed by U.S. Senate Provides Tax Relief

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The CARES Act (H.R. 748) passed by the Senate last night would provide several elements of temporary tax relief. The Act has not yet been approved by the House, and is therefore not yet final.

Key tax provisions of the 883-page bill include:

  • The IRS will be required to promptly send tax “recovery rebates” to eligible individual taxpayers: $1,200 to individuals and $2,400 to joint return filers, plus $500 for each qualifying child. The payments begin to phase out at $75,000 of income for individuals and $150,000 for joint return filers. The benefit phases out entirely for individuals with incomes of more than $99,000 and couples with incomes of more than $198,000.
  • Authorization of $150 billion in relief for states and local governments whose tax revenues were impacted by the postponement of the federal tax filing date to July 15.
  • Creation of a refundable payroll tax credit for 50% of employer wages for businesses that were fully or partially prohibited from operating during the coronavirus crisis. 
  • Waiving the 10% early withdrawal penalty for distributions from retirement funds of up to $100,000 made during 2020. 
  • Provisions that businesses can carry back net operating losses from 2018, 2019 and 2020 for up to five years, in order to free up cash. These NOLs would not be subject to a limit based on taxable income.
  • Providing a temporary suspension of certain limitations on charitable contribution deductions.

RECENT UPDATES AND DIRECTORY OF COVID-19 RESOURCES

With so much information, so many decisions and so little time to address issues raised by the coronavirus pandemic, you need help at your fingertips. Click here for our most recent updates.

We will continue to add information about specific topics so please check back frequently!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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