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Economic Stimulus Checks Under the CARES Act

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You’ve probably heard that IRS will be making millions of “economic impact payments” (also called “recovery rebates”) in the coming months to help people stay afloat during this time of economic uncertainty related to the COVID-19 crisis. Here’s what you need to know about this program.

Amount of payment. IRS has begun making payments of up to $1,200 to eligible taxpayers or up to $2,400 to married couples filing joint returns. Parents will get an additional $500 for each dependent child under age 17. Thus, the payment for a married couple with two children under 17 will be $3,400.

Who is eligible. U.S. citizens and residents are eligible for a full payment if their adjusted gross income (AGI) is under $75,000 (singles or marrieds filing separately), $122,500 (heads of household), and $150,000 (joint filers). The individual must not be the dependent of another taxpayer and must have a social security number that authorizes employment in the U.S.

Phaseout based on income. For individuals whose AGI exceeds the above thresholds, the payment amount is phased out at the rate of $5 for each $100 of income. Thus, the payment is completely phased out for single filers with AGI over $99,000 and for joint filers with no children with AGI over $198,000. For a married couple with two children, the payment will be completely phased out if their AGI exceeds $218,000.

How to get a payment.

Rebates will be paid out in the form of checks or direct deposits. Most individuals won’t have to take any action to receive a rebate, but some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment. Social Security recipients will automatically receive the stimulus payment without having to file a simple tax return. People who typically don’t file a tax return will need to file a simple tax return to receive the payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.

IRS will compute the rebate based on a taxpayer’s tax year 2019 return (or tax year 2018, if no 2019 return has yet been filed). If no 2018 return has been filed, IRS will use information for 2019 provided in Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.

IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. To speed receipt of payment, taxpayers are advised to include direct deposit banking information on the return.

In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail. IRS will post all key information on https://www.irs.gov/coronavirus.  You can also register if you were not required to file in 2018 or 2019 to receive stimulus.

Economic impact payments will be available throughout the rest of 2020.

Payments nontaxable. Economic impact payments will not be included in the recipient’s income for tax purposes.

When we know further details we’ll post it or you’re welcome to reach out to us at https://www.bgmfcpas.com/coronavirus-aid-relief.htm for additional information or questions.

Assistance due to COVID-19

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In response to the economic impacts from the COVID-19 pandemic, the Federal government and State of Ohio have already passed legislation or made declarations designed to provide relief and aid to small and midsize businesses and their employees. As with many new pieces of legislation, initially they create more questions than they do answers.

This is certainly true with the COVID-19 related legislation that is being quickly written and rushed through the legislative process.  Often the actual legislation will appoint some other agency with the task of writing the rules, regulations, and guidance required to enforce and interpret the new legislation.

Due to the sweeping impact of some of the COVID-19 legislation, multiple government agencies are tasked with providing this guidance. We often must wait months on these agencies to provide that guidance.   However, due to the urgency of this matter, we have been told that this guidance should be coming in days and weeks rather than months.

At BGMF, we are making every effort to stay on top of and familiarize ourselves with any legislation or relief efforts that may be applicable to our clients. We are here to assist you in any way that we can. Unfortunately, due to the reasons noted above, some questions just can’t be answered at this time.

However, we are consistently monitoring our resources and the applicable government agencies for additional guidance and clarification. Below is a summary of the major legislation and assistance that is currently available. As additional legislation, assistance and guidance becomes available we will keep you updated. If you are aware of something that we have not included below that you think would be helpful to others, please contact us and let us know.

Families First Coronavirus Response Act

  • The Families First Coronavirus Response Act requires certain employers to provide employees with paid sick or family leave for specified reasons related to COVID-19.
  • Applies to most employers with less than 500 employees.
    • Health care workers and emergency responders may be excluded. (We are waiting on additional guidance related to this exclusion.)
    • Small businesses with fewer than 50 employees may be exempt from the extended family leave portion if following the requirements would jeopardize the viability of the business going forward. (We are waiting on additional guidance related to this exemption.)
  • The Act provides that employees of covered employers are eligible for:
    • Two weeks (up to 80 hours) of paid sick time at 100% the employee’s regular rate of pay (up to maximum of $511 per day) where the employee is unable to work because the employee:
      • is subject to a Federal, State or local quarantine or isolation order related to COVID-19; or
      • has been advised by a health care provider to self-quarantine related to COVID-19; or
      • is experiencing COVID-19 symptoms and is seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of paid sick time at two-thirds the employee’s regular rate of pay (up to a maximum of $200 per day) because the employee:
  • is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services; or
  • is caring for an individual subject to a Federal, State, or local quarantine or isolation order related to COVID-19; or
  • is caring for an individual that has been advised by a health care provider to self-quarantine related to COVID-19; and
  • Up to an additional 10 weeks of paid family leave at two-thirds the employee’s regular rate of pay (up to a maximum of $200 per day) where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
    • Consists of 12 weeks in total. The first two weeks can be either unpaid or covered by an employee’s accrued paid time off including the paid sick time mentioned above, followed by up to 10 weeks of paid extended family and medical leave.
  • Introduces two new refundable payroll tax credits, designed to immediately and fully reimburse certain employers, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
  • Health Insurance premiums paid by the employer during these periods of sick time and family leave may also be reimbursable.
  • Self-Employed taxpayers are eligible and will be reimbursed through a refundable credit against their income tax.
  • Part-time employees are eligible based upon an average number of hours calculation.
  • Allows businesses to retain and access funds that they would otherwise pay to the IRS in payroll taxes. The payroll taxes that are available for retention include withheld federal income taxes, the employee and employer share of Social Security and Medicare taxes. (We are waiting on additional guidance as to how and when this can be implemented.)
    • If there are not sufficient payroll taxes to cover the cost of providing the sick pay and family leave, employers will be able to file a request for an accelerated payment from the IRS. (The IRS expects to process these requests in two weeks or less.)
  • Go to the following address for further information: https://www.dol.gov/agencies/whd/pandemic

Tax Filing Deadline and Tax Payments Automatically Postponed

  • The Internal Revenue Service issued IRS Notice 2020-18 that became effective March 20, 2020.
  • The April 15, 2020 deadline has been postponed until July 15, 2020.
  • Any individual, trust, estate, partnerships, association, company or corporation with a Federal income tax return due on April 15, 2020 is automatically postponed until July 15, 2020. In addition, any Federal income tax payments, including estimated tax payments, due from April 15, 2020 to July 15, 2020 will be disregarded in the calculation of penalty and interest.

Small Business Administration Disaster Loan Assistance

  • The SBA provides low-interest, long-term loans for physical and economic damage caused by a declared disaster.
  • The SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.
  • The current interest rate is 3.75% and the term is 30 years or less.
  • Go to the following address for further information: https://disasterloan.sba.gov/ela/

Unemployment Insurance

  • An executive order issued by Governor DeWine expands flexibility for Ohioans to received unemployment benefits during Ohio’s emergency declaration period.
  • The standard waiting period for eligible Ohioans has been waived.
  • All charges during Ohio’s emergency declaration period will be mutualized.
  • The benefit is typically half of the previous wage.
  • The minimum weekly benefit is $134 and the maximum weekly benefit is $480 (could be higher depending on the number of dependents).
  • Go to the following address for further information: http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm

Deferral of Insurance Premium Payments

  • Effective March 20, 2020, the Ohio Department of Insurance issued Bulletin 2020-3, Health Insurance Coverage Flexibility for Ohio Employees.
  • All insurers must give their insureds the option of deferring premium payments, interest free, for up to 60 days from each original premium due date.

Deferral of Bureau of Workers Compensation Payments

  • The Bureau of Workers Compensation announced that the insurance premiums due for March, April and May for the current policy year may be deferred until June 1, 2020.

Bank Payments

  • Many banks are currently offering assistance to their customers. For example, banks may offer interest only payments for 3-6 months or no payments for 3-6 months. (The amount would be added to the end of the loan.)

If you have questions or need additional information concerning any of these matters, please contact us online or via phone at 937-325-0623 and we will assist you in any way we can.

If you need assistance with filling out forms, putting together financial information, and other aspects of the relief packages please get in touch with us ASAP.  For updates please check this blog, sign up for our newsletter or follow us on Facebook.