Article Highlights: Recovery Rebate Penalty-Free Retirement Withdrawals Waiver of the 2020 RMD Requirement Temporary Removal of Charitable Contribution Limits Employer Student Loan Payments Employer Delayed Payroll Tax Deposits Employer Credit for Retaining Employees Temporary Reinstatement of NOL Carrybacks Limitation on Losses Prior Year AMT Credit for Corporations Limitation on Business Interest Loan Guarantees and Subsidies The “Coronavirus Aid, Relief, and Economic Security Act” (Cares Act) includes many tax and financial breaks for both individuals and businesses. We broke down many of the essential elements and how they can assist you and your business during this troubling time.Recovery Rebate - The most talked about provision is the “recovery rebates” for individuals. These rebates are actually credits allowed on taxpayers’ 2020 tax returns that will be paid out in advance by the Treasury. Each eligible individual will receive $1,200 ($2,400 for married couples filing jointly) plus an additional $500 for each qualifying child (under age 17 at years end). These rebates are intended for low- to middle-income individuals, so they are phased out for higher income folks. For unmarried individuals the credit begins to phase out at an AGI of $75,000 and is fully eliminated at $98,990. For those filing as head of household, the phase-out range is $112,500 to $136,490, and for married couples filing jointly it is $150,000 to $197,990. The Treasury will determine who will receive a check and the amount they are entitled to based on the individual’s 2019 tax return. Where no 2019 return has been filed at the time of the rebate payment, the Treasury will use the 2018 tax return. For those who have not filed either a 2018 or 2019 return, the Treasury will provide a payment to individuals that received 2019 Social Security or Railroad Retirement benefits. In recent guidance, the IRS has indicated they will be providing an on-line means for taxpayers to provide their direct deposit information so the rebates can be expedited rather than having to wait for a check. The IRS has also indicated they would provide later guidance on how people that are not required to file a return can file in order to obtain an advance rebate. Further details will be provided at www.IRS.gov/coronavirus.Where an advance rebate is more or less than allowed because an individual’s filing status or family size is different in 2020 or the credit is subject to phase-out based on 2020 income, the adjustment is made on the 2020 tax return. Thus, individuals may be entitled to an additional credit, and if the advance rebate was greater than the actual credit, they will NOT have to repay the excess. This means that individuals who otherwise wouldn’t have a 2020 return filing requirement based on their income will likely have to file to reconcile their advance rebate with their actual credit.The rebates will not be paid to individuals who are claimed as a dependent of another on a prior year return. Also ineligible for the credit or an advance rebate are those without a Social Security number (or ATIN for an adopted child who doesn’t yet have an SSN).Additional Key Provisions – The Cares Act is over 500 pages covering tax provisions, economic stimulus, business loans, health care and more. Following is an overview of the key issues relating to individuals and small businesses. Individuals: Penalty Free Retirement Withdrawals - Penalty-free withdrawals from qualified retirement plans (including 401(k)s, TSAs, SEPs and traditional IRAs) are allowed. The withdrawals are limited to $100,000 and the income is taxable over a three-year period with an option to also recontribute the withdrawal over a three-year period. RMD Waiver - There is a one-year waiver for the 2020 required minimum distribution (RMD) from qualified plans and traditional IRAs for taxpayers that turned 70.5 in a year before 2020 and those that turn 72 in 2020. This prevents them from having to take a distribution when the stock market is in a decline. Charitable Contributions - A suspension of charitable contribution limits applies for 2020. Generally, for cash gifts, tax deductible charitable contributions are limited to 60% of adjusted gross income (AGI). The suspension of the limitation will allow taxpayers to make larger charitable contributions during this trying time. Also included is an above-the-line charitable deduction limited to $300 of cash donations for those that don’t itemize their deductions. Student Loan Payments - Employees can exclude from income payments (Up to $5,250) made before January 1, 2021 by their employers towards their student loans.