Clients have been asking about how this complex, comprehensive new law may apply to them. Whilst not everything here may be pertinent to your situation, every client will benefit from some aspect, and the answers to the most common questions are below.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a $2 trillion bill meant to impact both individuals and businesses and contains significant tax-savings measures. It could affect prior tax years while also creating immediate cash-flow.

Impact on Individuals

Stimulus Checks

Perhaps the most impactful provision for American citizens is the CARES Act’s promise of cash payments of up to $1,200 per single individual and $2,400 for a married couple. Parents will also receive an additional $500 per qualifying child. Payments are phased-out for individuals with incomes greater than $75,000 and for married couples filing jointly with income greater than $150,000 up to around $198,000 depending on household size. (Unfortunately, my 18-year-old daughter will not qualify nor will any college students aged 19-23, much to their disappointment!)

Americans Can Defer for 90 Days on their Tax Returns

As we continue to face uncertain times, the IRS has made a welcome announcement regarding our tax returns.

Treasury Secretary Steven Mnuchin has announced that the IRS has decided to extend the filing and payment deadline for 2019 tax returns, allowing taxpayers to defer until July 15. Mnuchin indicated this move will put $300 billion into the economy during a time of great economic concern over the consequences of the COVID-19 pandemic.

The payment deferment is subject to certain caps, however. Individuals may defer tax payments of up to $1 million, while corporations may defer up to $10 million. The limits were purposefully selected to benefit small businesses that report income through corporations, partnerships or other pass-through entities.