Late Wednesday night, the Senate passed in a 96-0 vote the $2 trillion Coronavirus Aid Relief, and Economic Recovery Act (Cares Act).

Individual Provisions

Recovery Rebates for Individuals

  • Recovery rebate for each taxpayer of $1,200 ($2,400 for joint returns).
  • Plus $500 for every qualifying child.
  • Rebates are means tested and begin phasing out after $75,000 adjusted gross income (At single), $112,500, (HOH), and $150,000 (MFJ).
  • The rebate amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase threshold and completely phased out at $99,000/$198,000 (single/MFJ).
  • No payment without proper tax identifications numbers.
  • IRS will base these amount on the taxpayer’s 2019 tax return
  • 2018 tax return if 2019 not yet filed
  • If no filing for either year, then based on information provided by Form SSA-1099 or RRB-2019 Social Security Benefit Statement
  • The Department of Treasury is required to conduct a public awareness campaign.

Special Rules for Use of Retirement Funds

  • Waiver for the 10-percent early withdrawal penalty for distributions up to $100,000.
  • Coronavirus-related distributions may be
  • Repaid any time during the three years from distribution.
  • Included in gross income ratably over three-taxable-year period.
  • Loan limit increased from $50,000 to $100,000.

Business Provisions

Delay of payment of Employer Payroll Taxes

  • Corporations may postpone employer payroll taxes.
  • 50 percent of social security taxes for the self-employed may be postponed.
  • 50 percent of deferred taxes are due by December 31, 2021; the remainder due by December 3.
  • The Social Security trust funds are held harmless under the provision.

Modifications for Net Operating Losses

  • Temporarily removes the taxable income limitation to allow a net operating loss (NOL) to fully offset income.
  • Losses from 2018, 2019, or 2020 may be carried back five years.

Modifications of Limitation on Losses for Taxpayers Other than  Corporations

  • The provision modifies the loss limitation applicable to pass-through businesses and sole proprietors they can benefit from the NOL carryback rules.