What is the CARES Act 2020, and how will the $2 trillion coronavirus aid package benefit you, your family, or your business?
The 2020 Coronavirus pandemic has affected the lives of most of the population.
With uncertainty over the length of time that the nation the virus will affect life, many people worry about their finances.
With many non-essential companies closing their doors during the crisis, employees and businesses are affected by the global shutdown.
It remains unclear how much of an impact the COVID-19 outbreak will have on the global economy. What is certain is that everyone is bracing themselves for the worst.
On March 27th, 2020, the US president, Donald Trump, signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). But, what is the CARES ACT 2020? And, how will it affect you, your family, and your business?
We'll explore the $2 trillion aid package. We'll see how the CARES act provides you with the relief and economic security that you need during this challenging period.
The act promises $2 trillion in aid. This will help provide for families and businesses affected by the coronavirus pandemic.
But, what does the senate's $2 trillion aid package include? How will the money be distributed? And what support will you be eligible for?
The CARES act will send direct payments to eligible adults. The act will supplement unemployment insurance, and allow borrowers of loans extra time to make payments.
The $2 trillion aid has been broken down to provide specific aid to certain groups.
The breakdown of the aid provided by CARES act is as follows:
The aid is designed to keep individuals and businesses afloat during the period of shutdown and restriction caused by the coronavirus pandemic.
What is the CARES act 2020? The package is not designed to be a stimulus package. It is for emergency relief.
The coronavirus pandemic has caused economic uncertainty throughout the entire world. America is unfortunately not exempt from this current crisis.
To prevent the spread of the virus throughout the US, measures have been put in place. These include social distancing, the closure of non-essential businesses, and restrictions on movement.
The coronavirus outbreak has affected a large percentage of the US population. The CARES act seeks to provide financial relief for those affected by the pandemic.
The main groups that the relief fund is designed to benefit are:
There is also a safety net in place which will supply funding to food security programs.
The Coronavirus Aid, Relief, and Economic Security Act 2020 seeks to be inclusive. The act is set up to ensure that all Americans are looked after during these challenging times.
While the relief fund does have a large proportion that will be paid to individuals, the CARES act also provides relief for small businesses and major corporations. This is to ensure businesses are able to stay open and secure jobs.
The Coronavirus Aid, Relief, and Economic Security Act 2020 benefits seven different groups. Here is a rundown of how each group will benefit from the CARES act.
The CARES act has several different elements aimed at helping people to remain engaged within the economy. For many, this will mean direct cash payments. There are also extensions on unemployment benefit as well as a change in the rules for tax returns and retirement contributions.
Some example payments would be:
The base figure used to determine your income will come from your 2019 earnings. If you are yet to submit your tax return to the IRS, then your 2018 income will be used.
Assuming the IRS currently has your bank details on file, you can expect a direct payment by approximately April 16th, 2020. For individuals who do not have their bank details on file, checks will be sent out in the mail.
This may take considerably longer for them to get to you. The checks will be posted to the address listed on your most recent tax return. It is important that you change your address with the IRS if you have moved.
The CARES act has an estimated $260 billion set aside for extending unemployment benefits. This will help to support those who currently claim.
For individuals receiving unemployment, insurance will receive an extra $600 a week for four months. This will be in addition to what is already paid.
The CARES act also extends unemployment benefit to those that are self-employed or who work as an independent contractor. Usually, these groups don't qualify for unemployment benefits. The Pandemic Unemployment Assistance program covers freelancers and gig workers and also allows provides benefits for those that have been laid off, became ill with coronavirus, or anyone that had to care for someone that had coronavirus.
For companies that employ fewer than 500 people, there will be forgivable loans available. The act also brings in changes to the rules about expenses and deductions. These changes are designed to make it easier for businesses to keep employees on the payroll for as long as possible and to continue trading.
The CARES act has approximately $10 billion set aside for grants of up to $10,000.
There is $350 billion set aside for forgivable loans of up to $10 million for each business.
For businesses that already have loans with the Small Business Administration, there will be $17 billion set aside. This is to provide relief and cover six months' repayments for any affected small business.
This essential relief funding is designed to help businesses stay afloat and maintain key elements of their business, such as payroll costs.
Keeping major companies afloat is essential. But so too is providing support for big corporations as this will lower the risk of mass redundancies.
The Coronavirus Aid, Relief, and Economic Security Act helps our big businesses by putting aside approximately $500 billion for loans.
These loans for major companies will need to be repaid to the government, and in the public interest, loads must be disclosed.
There is $58 billion earmarked for keeping airlines companies in the business. This money is to be used to cover wages. There is a potential $25 billion for passenger airlines, up to $4 billion for cargo air carriers, and $3 billion for contractors. $17 billion has been set aside for airlines that are vital to national security.
If a company receives a loan under the CARES act, it is not allowed to make stock buybacks during lifetimes of the loan plus one year.
The act prevents the president, vice president, or any other members of the cabinet from making an application. They will also not be able to receive loans or funding for their own businesses.
To protect the loans that the CARES act pays out, a new inspector general will oversee pandemic recovery and the public loans that get awarded.
A refundable tax credit for businesses that are closed or distressed can be awarded to businesses of all sizes. There should be a focus on getting employees hired back or being put onto paid furlough to ensure that they have jobs that they can go back to. #
This tax credit will cover up to 50% of a business's payroll on the first $10,000 compensation.
Where a company has more than 100 employees working full time, use the credit to cover wages for employees when they are not able to work due to COVID-19. If a business has less than 100 employees working full-time, you can use this deduction could even if the business has remained open.
During the coronavirus, hospitals and public health organizations are under a lot of strain. With unprecedented hospital admissions, deploying staffing, and sourcing ventilators and other treatment will be major issues.
The Coronavirus Aid, Relief, and Economic Security Act support public health in the following ways:
There is a range of different financial support areas that are provided for under the CARES act.
There is also another list that includes all the different ways that areas such as universities, and the arts can benefit from relief funding during the global coronavirus pandemic.
$339 billion is being put aside for state and local governments. This can be divided up as being $150 billion for direct aid for state and local governments that are short on cash flow due to the volume of cases they are experiencing. $274 billion will go toward specific COVID-19 funding.
There is also:
The CARES Act has a safety net element that is designed to be the second wave of funding for food security programs.
$8.8 billion has been set aside for improving child nutrition giving schools the ability to provide meals
$450 million more will be spent on food banks and other community food distribution programs.
Supplemental Nutrition Assistance Program (SNAP) will receive around $15 billion. This will help to deal with the rise of signups due to coronavirus
The American Indian reservations, Northern Mariana Islands, Puerto Rico, and American Samoa will all get extra funding as well as vital access to federal nutrition programs.
The Coronavirus Aid, Relief, and Economic Security Act is a wide-ranging and far-reaching package. The CARES act provides valuable financial aid, relief, and support to those that need it most during the COVID-19 pandemic.
With a total funding pot of around $2 trillion, there are a lot of different people from all backgrounds that will benefit from this generous relief package.
With $2 trillion of aid in place, it may cause many people to wonder what effect the CARES act will have on the nation's finances.
It is clear that we are heading into financial uncertainty and a potential recession.
The CARES act will act as a buffer that will protect many businesses, large and small, from going under. By putting funding in place, more jobs will be preserved.
As the world comes out of isolation, we'll need our valued employees again. The money set aside for businesses through the CARES act is going to make a considerable difference to businesses that might be teetering on the edge.
With $900 billion set aside for small businesses and major corporations, the Coronavirus Aid, Relief, and Economic Security Act is designed to keep companies afloat during these turbulent times.
There is a range of different options for loans. The eligibility for the various loans will depend on the size of your organization and the number of people that you employ.
For small businesses, forgivable loans may be issued. Big corporations are eligible for loans. Yet, these need to be publicly disclosed and will need to be repaid to the government.
The focus of the funding is to keep businesses intact and to avoid redundancies.
People will benefit from this both directly, in the form of a one-off payment to all workers, as well as indirectly through the grants and loans awarded to businesses to help them stay open, and keep paying their employees.
This relief package is the biggest of its kind and is designed to help limit the financial worries than many individuals and businesses will experience.
During this period of uncertainty, it is important to make sure that all your finances are in order. With tax returns, payroll, and business taxes all relevant concerns during the pandemic, you should get the support that you need in this area.
ATAX is here to help keep your finances in order as you make any applications for your CARES act funding. For information on our services, or to discuss if we can help you, call our Yonkers office today at 1(866)999-2829.