10.09.20

COVID-19 Business & Individual Resources

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is intended to provide liquidity to business owners during this uncertain time. When implemented, many new resources will be available to small businesses, as well as certain non-profits and other employers.

Individual Relief:

Unemployment Insurance

  • The Pandemic Unemployment Assistance program provided payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.

  • Included an additional $600 per week payment to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months and an additional 13 weeks of unemployment benefits to those who need it.

    • Note: The additional $600 per week ended on July 31, 2020.
  • Provides funding to support “short-time compensation” programs, where employers reduce employee hours instead of laying off workers and employees with reduced hours receive a pro-rated unemployment benefit. The federal government will pay 100% of costs states incur in providing this short-time compensation until December 31, 2020.

  • Full federal funding of the first week of compensable regular Unemployment for States with no “waiting week”, so workers can claim UI immediately.
  • On August 8, President Trump announced the Lost Wages Assistance (LWA) Program, which allows FEMA to provide supplemental unemployment insurance benefits. 
    • The Georgia Department of Labor (GDOL) received approval for all six weeks of LWA benefits.
    • Georgia claimants receive $300 per week on top of regular unemployment benefits for 6 weeks. Benefits are retroactive to August 1, 2020.

    • Additional information can be found here.

Recovery Rebate: All U.S. residents with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for the full $1,200 ($2,400 married) rebate. They are also eligible for an additional $500 per child. The distribution of payments has begun. Additional information on the payments can be found here.

November 21 Midnight Eastern Time is the deadline to request your Economic Impact Payment if you did not: 

  • file a 2019 federal tax return, 

  • get an Economic Impact Payment,

  • register for an Economic Impact Payment already. 

Additional information on how to register for your payment can be found here.

  • What about taxpayers with adjusted gross income over $75,000 ($112,500 for head of household and $150,000 married)? Are they eligible to receive any rebate? The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children. For a typical family of four, the amount is completely phased out for those with adjusted gross incomes exceeding $218,000.

  • What if my income was above the threshold in 2019, but I’ve lost my job due to the coronavirus? Can I still get a rebate check? If your income in 2019 was in the phase-out range you would still receive a partial rebate based on your 2019 tax return. However, the rebate is actually an advance on a tax credit that you may claim on your 2020 tax return. If your income is lower in 2020 than in 2019, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year. 

  • Is the rebate taxable or will I have to pay back any amount if the rebate based on my 2019 return is larger than what it would be if based on my 2020 tax year return? No, the rebate is treated like other refundable tax credits, such as the child tax credit and earned income tax credit, and not considered income. Moreover, if the credit amount you qualify based on 2020 income is less than what you qualify for based on your 2019 tax return, it does not have to be paid back.

  • Who qualifies as a child for purposes of the rebate? Any child who is a qualifying child for the purposes of the Child Tax Credit is also a qualifying child for the purposes of the recovery rebate. In general, a child is any dependent of a taxpayer under age of 17.
    • Do dependents, other than children under 17, qualify a taxpayer for an additional $500 per dependent? No, the additional $500 per child is limited to children under 17.

    • Are college students eligible for a recovery rebate? Only if they are not considered a dependent of their parents. Generally, a full-time college student under the age of 24 is considered a dependent if their parent(s) provide more than half of their support.
  • Are individuals with little to no income or those on means-tested federal benefits, such as SSI, eligible for a recovery rebate? Yes, there is no qualifying income requirement. Even individuals with $0 of income are eligible for a rebate so long as they are not the dependent of another taxpayer and have a work-eligible SSN.

  • Are seniors whose only income is from Social Security or a veteran whose only income is a veterans’ disability payment eligible? Yes, as long as they are not the dependent of another taxpayer. The bill also provides IRS with additional tools to locate and provide rebates to low-income seniors who normally do not file a tax return by allowing them to base a rebate on Form SSA-1099, Social Security Benefit Statement or Form RRB-1099, which is the equivalent of the Social Security statement for Railroad Employees. 

    • On April 1, the Department of Treasury confirmed that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts. 

  • I am eligible for a rebate, what do I have to do to receive it? For the vast majority of Americans, no action on their part will be required to receive a rebate check since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return. This includes many individuals with very low income who file a tax return despite not owing any tax in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. However, if you have not received your rebate, register for your payment here by November 21 Midnight Eastern Time.

  • What should I do if I did not file a tax return for 2019 or 2018? The best way to ensure you receive a recovery rebate is to file a 2019 tax return if you have not already done so. This could be accomplished for free online from home using the IRS Free file program. The bill also instructs the IRS to engage in a public campaign to alert all individuals of their eligibility for the rebate and how to receive it if they have not filed either a 2019 or 2018 tax return. Additionally, more information can be found here on how to register for your payment.

  • How will the IRS know where to send my payment? For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed. 

    • The IRS will utilize Form SSA-1099, Social Security Benefit Statement for individuals who receive Social Security retirement, survivors, or Social Security Disability Insurance benefits

    • The IRS will utilize Form RRB-1099 for individuals who receive Railroad Retirement benefits.

    • Non-Filers (individuals who had a gross income that did not exceed $12,200 for 2019 or were not otherwise required to file a federal income tax return for 2019 and didn’t plan to), can provide their information here to receive the payment.

    • You can check the status of your payment here.
  • The IRS does not have my direct deposit information. What can I do? You can enter your direct deposit information here. 
  • IRS Get My Payment says that my Economic Impact Payment was sent to an account I don’t recognize. Why is that, and how do I get my payment? When some taxpayers file their tax return, they may choose an option available from their tax preparer or software provider to help them pay their fees, get their refund more quickly or even load the refund onto a direct debit card. This group of different products is referred to as refund settlement products. In these situations, taxpayers may:
    • Use a banking product to help them complete the tax filing transaction, sometimes referred to as a Refund Anticipation Loan (RAL) or a Refund Anticipation Check (RAC).

    • Choose to have their tax refund loaded onto a debit card provided by a variety of groups in the tax and financial communities. 

When you filed your tax return, if you chose a refund settlement product for direct deposit purposes, you may have received a prepaid debit card. In some cases, your Economic Impact Payment may have been directed to the bank account associated with the refund settlement product or prepaid debit card. 

If the refund settlement product or the associated account is closed or no longer active, the bank is required to reject the deposit and return it to the IRS. The “Get My Payment” app will be updated once the returned payment to the IRS is processed. Timing of this process depends on several variables, including when and how the payments are rejected and returned to the IRS, when “Get My Payment” updates, and when taxpayers check the tool. 

Once the returned payment is processed by the IRS, the payment will automatically be mailed to the address on the 2019 or 2018 tax return, or the address on file with the U.S. Postal Service – whichever is more current, and the status in Get My Payment will update accordingly. 

The IRS also noted that there was a reporting error that started showing up in recent days on Get My Payment, which inaccurately indicated rejected payments were being sent back to the same taxpayer account a second time. They are actually being mailed to the taxpayers. The IRS has quickly taken steps to correct this reporting error. Get My Payment will be updated starting Tuesday, April 21 to reflect that the taxpayer’s payment has actually been mailed; not rerouted to a closed bank account.

Retirement Accounts

  • 10% early withdrawal penalty is waived for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes.

  • The required minimum distribution rules for certain defined contribution plans and IRAs is waived for 2020.

Tax Relief

  • The deadlines to file and pay federal income taxes were extended to July 15, 2020. The IRS announced this delay on March 21.

  • The deadline to file estate taxes and associated gift taxes, typically due within nine months from the date of death, were postponed to July 15, 2020. The IRS announced this delay on April 9.
  • An above the line charitable contribution deduction up to $300 is allowed in 2020. Additionally, the limitation on charitable contribution deductions for taxpayers who itemize deductions is increased to 50% of adjusted gross income in 2020.

  • Employees can receive up to $5,250 of student loan repayment benefits from their employer tax-free in 2020.  

Business Relief:

Small Business Paycheck Protection Program (PPP): Loans of up to $10 million will be available, with an overall authorization level of $659B, to provide capital to cover the costs of retaining employees. Effective February 15, 2020, allowing employers to rehire recently laid-off employees through December 31, 2020.

Note: The PPP application process closed on August 8, 2020.

  • Who can apply? All businesses including 501(c)(3) nonprofits, including 501(c)(3)-designated churches, 501(c)(19) veteran organizations, tribal businesses described in section 31(b)(2)(C) of the Small Business Act, sole-proprietors, independent contractors, physician practices regardless of how they are structured, and other self-employed individuals with fewer than 500 employees.  
  • Are any businesses with over 500 employees eligible? Yes, for this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA.
  • Where can a small business apply for the Paycheck Protection Program? Small businesses can apply for the PPP at any lending institution that is approved to participate in the program through the existing SBA 7(a) lending program and additional lenders approved by the Department of Treasury.
    • This could be the bank a small business already uses, or a nearby bank. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks.

    • Small businesses do not have to visit any government institution to apply for the program.

    • Small businesses can call their bank or find eligible lenders in their area through SBA’s online Lender Match tool.
  • Loans: The amount any small business is eligible to borrow is 250 percent of their average monthly payroll expenses (based on the prior year’s payroll), up to a total of $10 million. Payroll costs will be capped at $100,000 annualized for each employee. Loans can be used for payroll support, paid leave, insurance costs, mortgage/rent payments, and utility payments. They do not have borrower, lender, or prepayment fees and are 100% government guaranteed. The loan’s interest rate is 1% and maturity is 5 years. The loan may be paid prior to the 5 year maturity with no penalty.
  • What counts as payroll costs? Payroll costs include:
    • Salary, wages commissions, or tips (capped at $100,000 on an annualized basis for each employee);
    • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
    • State and local taxes assessed on compensation; and
    • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
  • Since payroll costs are capped $100,000 per employee, does that exclusion apply to all employee benefits of monetary value? No, the exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
    • Employer contributions to defined-benefit or defined-contribution retirement plans;
    • Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
    • Payment of state and local taxes assessed on compensation of employees.
  • What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts? In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application. 
  • Forgiveness: All PPP Loans are eligible for forgiveness in an amount equal to the payroll costs, interest on mortgage, rent and utilities, however 60% of the funds must be used on payroll.

  • What portion of the loan will I owe? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 week covered period. You will also owe money if you do not maintain your staff and payroll.
    • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
    • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
    • Re-Hiring: You have until December 31, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
    • Good Faith Effort: The Paycheck Protection Program Flexibility Act exempts businesses from a reduction in loan forgiveness if they, in good faith, are:
      • unable to rehire former employees or are unable to hire similarly qualified employees; or
      • unable to return to the same level of business activity due to compliance with COVID-19 federal requirements or guidance
  • What type of income for sole proprietors or independent contractors is forgivable under PPP? The nature of the income that applies to the PPP must be subject to either the payroll tax or self-employment tax. Therefore, it is not about how much your company made but how much your company paid out in taxable payroll and approved payroll costs.
    • Sole proprietors report their business income and expenses on Schedule C of their individual income tax return, Form 1040. The net earnings from Schedule C, which is found on line 31 of Schedule C, is subject to self-employment tax.
    • Independent contractors can either report their income on Schedule C or as Other Income on Schedule 1, line 8. As long as the Other Income is subject to self-employment tax, it applies to the PPP calculation.

Small Business Economic Injury Disaster Loans (EIDL): Eligibility to the EIDL program is expanded to tribal businesses, cooperatives, and ESOPs with fewer than 500 employees or any individual operating as a sole proprietor or an independent contractor.

SBA Express Loan Program: This program, which requires less paperwork and documentation, has increased its maximum loan amount from $350,000 to $1 million through December 31, 2020.

General Business Financing: $500 Billion to the Department of Treasury’s Exchange Stabilization Fund (ESF), including a 13(3) facility to provide targeted support to nonprofits and businesses between 500 and 10,000 employees.

  • $454 billion for unforgivable secured loans through the Federal Reserve 13(3) authority to larger businesses, states, and municipalities.

  • Funds lent to nonprofits and businesses between 500 and 10,000 employees must be used to retain at least 90 percent of the recipient's workforce, among other requirements.

Amendments to Employee Mandates: The CARES Act placed caps on paid leave provisions within the Families First Coronavirus Response Act.

  • An employer is not required to pay more than $200 per day and $10,000 in the aggregate for each employee on paid FMLA and is not required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate to care for a quarantined individual or child.

Tax Relief

  • The deadlines to file and pay federal income taxes were extended to July 15, 2020. The IRS announced this delay on March 21. 
    • The IRS announced on April 9 that tax returns and payments for tax-exempt organizations and fiscal year businesses due between April and June were postponed until July 15, 2020.

  • Employee retention credit (50% of wages paid) for employers subject to closure during the coronavirus outbreak.

  • Employer payroll tax payments are deferred. ½ of payment is due December 31, 2021 and the other ½ is due December 31, 2021.

  • 2018, 2019, and 2020 net operating losses can be carried back 5 years.

  • Loss limitations for pass-through entities and sole proprietors are modified.  

  • Recovery of AMT credits is accelerated-allowing companies to claim AMT refundable credits now.  

  • Business interest expense deduction is increased from 30% to 50% for 2019 and 2020.

  • Technical correction to Qualified Improvement Property depreciation, which allows businesses, especially in the hospitality industry, to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building. 

  • Alcohol used to produce hand sanitizer is exempted from excise taxes in 2020.

  • Employers are able to receive an advance tax credit from Treasury for required paid sick and family leave, instead of having to be reimbursed on the back end.

Local Government Relief:

$150 billion to the U.S states and territories for direct payments to local governments for expenditures incurred due to the COVID 19 public health crisis.

  • A minimum of $1.25 billion will be provided to each state. 

  • In total, the State of Georgia received $4.12 billion. Additional information can be found here.

Families First Coronavirus Response Act (FFCRA):

  • Free Coronavirus Testing: Requires full coverage by private health plans, Medicare Advantage, Medicare, Medicaid, CHIP, and TRICARE for coronavirus testing and related visits. Additionally, state expenses for the uninsured would be covered through Medicaid.

  • Food Assistance: Provides additional funding for nutrition programs, such as WIC, SNAP, emergency food assistance, home delivery services, and assistance to seniors.

  • Health Services: Provides additional funding for health items and services to shore up deficiencies within our military, veterans, and Native American health care systems.

  • Employee Assistance: Provides workers with up to 2 weeks of job-protected leave during the coronavirus outbreak. 

    • First 2 weeks of leave cover full pay for employees who are sick, quarantined, under isolation order, or caring for child with closed school or sick relative (capped at $511/day and $5,110 total for sick or in forced quarantine; $200/day and $2,000 total). 

    • For working parents, they are eligible for another 10 weeks to cover potential school closures due to the coronavirus outbreak. They will be paid at least 2/3rds of present salary (capped at $200/day and $10,000 in aggregate).

    • Businesses over 500 workers are exempt and Department of Labor can issue hardship rule that exempt businesses under 50 employees.

    • Establishes payroll tax credit to refund businesses for emergency leave paid to employees.  

    • The Department of Labor released the below information on the employee assistance provided in the FFCRA:

Click here to download a printable version of this guide.