Updated 4/1/2020
         
Families First Coronavirus Relief Act (FFCRA) & Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
     

INFORMATION FOR INDIVIDUALS

As practitioners, we have many questions which remain unanswered. 

As we have additional information, this page will be updated, so please check back periodically.

Stimulus Checks

         

 

Your specific situation may modify these numbers a bit, so your actual payment may vary.  I caution you that this is based on what we know now, and the IRS needs to work out the mechanics.

Payment Eligibility:

  • Only U.S. residents are eligible for a stimulus payment

             ​

  • Recipients can’t be a dependent of another person and receive a stimulus payment

             ​

  • Recipients need to have a social security number and authorization to work in the United States

Amount of Payment:

            

The amount of your payment is based on your adjusted gross income income and filing status

  • The IRS will use your 2019 tax return information, if you have filed

    • Alternatively, the IRS will use your 2018 tax return information, if you have not yet filed for 2019

    • It is not clear what the cutoff date is for the 2019 return to be filed and affect the payment calculation

 

  • Individuals:

    • Income up to $75,000, rebate eligibility of $1,200

    • Income between $75,001 and $98,999, rebate eligibility is subject to phaseout

    • Income exceeding $99,000, ineligible for a stimulus payment

 

  • Married Couples (filing jointly):

    • Income up to $150,000, rebate eligibility of $2,400

    • Income between $149,999 and $197,999, rebate eligibility is subject to phaseout

    • Income exceeding $198,000, ineligible for a stimulus payment

 

  • Head of Household:

    • Income up to $150,000, rebate eligibility of $1,200

    • Income between $149,999 and $146,499, rebate eligibility is subject to phaseout

    • Income exceeding $146,500, ineligible for a stimulus payment

 

  • If you have dependents, you are eligible for an additional $500 per child under age 17:

    • This portion of the payment is subject to the above income phaseouts

    • There is no limit on the number of children that qualify

    • Dependents over the age of 16 are not eligible for any stimulus payment

Payment Date:

  • Checks are supposed to be produced “as rapidly as possible.” US Secretary of the Treasury Mnuchin has hinted they will come in April, but it’s been suggested that could take until June.

As a Refundable Credit:

Technically, the checks are advances of refundable credits, which means:

             

  • Your stimulus check is based on your 2020 income

  • When you file your 2020 tax return, the IRS will compare your income numbers

    • If you should have gotten more than you did, you’ll get a refund (or a reduction in the amount due)

    • If you should have gotten less than you should have, your 2020 refund (or amount due) will not be affected

  • If you have no income or your income comes from SSI or non-taxable sources, you are still eligible for the rebate  

    • If you were not required to file a tax return, the payment will be automatic  

                   

  • The payment is not taxable income 

Other Information:

 

  • Even if you moved, the law requires the Treasury to send notice of the payment by mail to your last known address no later than a few weeks after your payment has been disbursed.

    • The notice will include:

      • how the payment was made, and

      • the amount of the payment, and

      • a phone number for the appropriate point of contact at the Internal Revenue Service (IRS) if you didn’t receive the payment

 

Unemployment

         

SEE UPDATED INFORMATION here and ADDITIONAL UPDATED INFORMATION here

         

The CARES Act expands the scope of individuals who are eligible for unemployment benefits.

  • Employees with the ability to telework with pay and those who are receiving paid sick leave or other paid benefits are not eligible for benefits (even if they otherwise satisfy the criteria for unemployment under the new law).

  • Gig workers, freelancers and independent contractors are newly eligible for unemployment benefits.

 

 

  • Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.

 

  • Part-time workers are eligible for benefits, but the benefit amount and how long benefits will last depend on your state. They are also eligible for the additional $600 weekly benefit.

 

  • The CARES Act provides all eligible workers with an additional 13 weeks. So participants in states with 26 weeks would be eligible for a total of 39 weeks. The total amount cannot exceed 39 weeks, but it may be shorter in certain states.

 

  • The extra $600 payment will last for up to four months, covering weeks of unemployment ending July 31.

 

  • Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27, 2020, and through Dec. 31, 2020.

 

  • Even if you’re already receiving unemployment benefits for reasons unrelated to the coronavirus, your state-level benefits will still be extended by 13 weeks. You will also receive the extra $600 weekly benefit from the federal government.

 

  • If you’ve exhausted your benefits, eligible workers can generally reapply. But how much you get and for how long depends on the state where you worked. Everyone gets at least another 13 weeks, along with the extra $600 payment.

  • The total benefit may not extend beyond 39 weeks (including any unemployment benefits or extended benefits received under existing state or federal law), unless, after the law is enacted, the duration of extended benefits is extended, in which case the total benefit may extend beyond 39 weeks by that same additional period of extended benefits.

 

  • This income could disqualify you from any other programs. The additional $600 benefit counts as income when determining eligibility for means-tested programs, except for Medicaid and the Children’s Health Insurance Program, known as CHIP.

 

  • Wisconsin has waived the one-week waiting period, but it’s unclear how long it will take to process claims.

Additional information can be found on the Department of Workforce Development website.

 see our flowchart for affected workers 

Student Loans

         

The federal government has already waived two months of payments and interest for many federal student loan borrowers. The CARES Act allows for an additional automatic payment suspensions for any student loan held by the federal government until September 30.

       

It is hard to contact many of the loan servicers right now, so check your account online in the coming weeks. Once you are logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.

How do I know if my loan is eligible?

If you’ve borrowed money from the federal government — a so-called direct loan — in the past 10 years, you’re definitely eligible. According to the Institute for College Access & Success, 90 percent of loans (in dollar terms) will be eligible.

Older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible, nor are Perkins loans, loans from state agencies, or loans from private lenders like Discover, Sallie Mae and Wells Fargo. The holders of all those kinds of loans may be offering their own assistance programs.

Within a few weeks, you should receive a notice indicating what has happened with your federal loans. You can choose to keep paying down your principal if you want. Then, after Aug. 1, you should get multiple notices letting you know about the cessation of the suspension period and that you may be eligible to enroll in an income-driven repayment plan.

Will my loan servicer charge me interest during the six-month period?

The bill says that interest “shall not accrue” on the loan during the suspension period. At the end of the suspension, keep a close eye on what your loan servicer does (or does not do) to put you back into your previous repayment mode. Servicer errors are common.

Will the six-month suspension cost me money, since I’m trying to qualify for the public service loan forgiveness program by making 120 monthly payments?

No. The legislation says that your payment count will still go up by one payment each month during the six-month suspension, even though you will not actually be making any payments. This is true for all forgiveness or loan-rehabilitation programs.

Is wage garnishment that resulted from being behind on my loan payments suspended during this six-month period?

Yes. So is the seizure of tax refunds, the reduction of any other federal benefit payments and other involuntary collection efforts.

Are there changes to the rules if my employer repays some of my student loans?

Yes. Some employers do this as an employee benefit. Between the date the bill is signed and the end of 2020, they can offer up to $5,250 of assistance without that money counting as part of the employee’s income. If the employer pays tuition for classes an employee is taking, that money will also count toward the $5,250.

 

Retirement Accounts

         

Which retirement account rules are suspended?

For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover. This change would not affect old-fashioned pensions.

What if I have to take money out of my I.R.A. or workplace retirement plan early?

You can withdraw up to $100,000 this year without the usual 10 percent penalty, as long as it’s because of the outbreak. You will also be able to spread out any income taxes that you owe over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.

This exception applies only to coronavirus-related withdrawals. You qualify if you tested positive, a spouse or dependent did or you experienced a variety of other negative economic consequences related to the pandemic. Employers can allow workers to self-certify that they are qualified to pull money from a workplace retirement account.

Can I still borrow from my 401(k) or other workplace retirement plan?

Yes, and you can take out twice the usual amount. For 180 days after the bill passes, with certification that you’ve been affected by the pandemic, you’ll be able to take out a loan of up to $100,000, up to 100% of the vested valance. Usually you can’t take out more than half your balance, but that rule is suspended.

If you already have a loan and were supposed to finish repaying it before Dec. 31, you get an extra year.

 
 

Charitable Contributions

         

If you want to help people who are suffering from the pandemic, the CARES Act makes a new deduction available — and not just for 2020 — for up to $300 in annual charitable contributions. It’s available only to people who don’t itemize their deductions, and you calculate this new one by subtracting the amount you give from your gross income.

To qualify, you have to give cash to a qualified charity and not to a donor-advised fund, which is a charitable account that affluent people often use to bunch contributions in a particular year in order to maximize deductions. If you’ve already given money since Jan. 1, that contribution counts toward the $300 cap.

If you'd like to to give more to charity than I usual, the limits on charitable deductions changed. As part of the CARES Act, donors can deduct 100 percent of their gift against their 2020 adjusted gross income. 

The new deduction is only for cash gifts that go to a public charity. If you give cash to a private foundation, the old deduction rules apply. And while the organizations that manage donor-advised funds are public charities, you do not get the higher deduction for donating cash to your donor-advised fund.

If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.

Extended Due Dates: Federal & Wisconsin

         

 

DUE DATES - The relief under Notice 2020-17 and 2020-18 applies to and is available solely for:

  • 2019 tax returns (originally) due on due on April 15, 2020

    • The notice covers the following types of “person”: individual, trust, estate, partnership, association, unincorporated business entity, company or corporation as provided in Sec. 7701(a)(1)​

PAYMENTS- The relief under Notice 2020-17 and 2020-18 applies to and is available solely for:

  • Federal income tax payments (including payments of tax on self-employment income) 

  • Federal tax payments, and estimated tax payments, that are due for the period beginning on April 15, 2020, and ending on July 15, 2020

    • The due date for estimated payments due June 15, 2020 ​remains unchanged

            ​

  • Section 965 installment payments due on April 15, 2020

Important Notes

         

  • Applicable returns are automatically extended, there is no need to file form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return) 

          

  • Interest, penalties, and additions to tax with respect to payments due before April 15, 2020 are not available for relief

    • Relief from the penalty may still be available under the normal rules

  • Interest, penalties, and additions to tax with respect to such postponed Federal income tax payments will begin to accrue on July 16, 2020

  • Individuals who have already filed their 2019 income tax return and scheduled the balance due to be withdrawn from their bank account by April 15, 2020, they may cancel the scheduled payment by calling the U.S. Treasury Financial Agent at 888.353.4537 at least two business days prior to the scheduled date

    • Then, go to irs.gov/directpay to reschedule the tax payment to meet the new deadline.

  • Individuals unable to file by July 15th can request an automatic extension to file your Federal income tax return until October 15th

    • To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request.

  • No extension is provided in this notice for the payment or deposit of any other type of Federal tax, or for the filing of any tax return or information return. including:

    • Corporate or Partnership income tax returns

    • Payroll or Excise taxes

    • Gift or Estate taxes​

    • Other information returns

  • Under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020

  • You do not have to be be sick, or quarantined, or otherwise impacted by COVID-19 to qualify for payment relief

 

Existing Installment Agreements – For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.

      

New Installment Agreements – The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS. Further information is available can be found at IRS.gov.

          

Offers in Compromise (OIC) – The IRS is taking several steps to assist taxpayers in various stages of the OIC process:

  • Pending OIC applications – The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer's consent.

  • OIC Payments – Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although by law interest will continue to accrue on any unpaid balances.

  • Delinquent Return Filings - The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018. However, taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.

  • New OIC Applications – The IRS reminds people facing a liability exceeding their net worth that the OIC process is designed to resolve outstanding tax liabilities by providing a "Fresh Start." Further information is available can be found at IRS.gov.

       ​

Non-Filers –The IRS reminds people who have not filed their return for tax years before 2019 that they should file their delinquent returns. More than 1 million households that haven't filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds. Many should consider contacting a tax professional to consider various available options since the time to receive such refunds is limited by statute. Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a "Fresh Start." See IRS.gov for further information.

        

Field Collection Activities - Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.

          

Automated Liens and Levies – New automatic, systemic liens and levies will be suspended during this period.

Passport Certifications to the State Department – IRS will suspend new certifications to the Department of State for taxpayers who are "seriously delinquent" during this period. These taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period. Certification prevents taxpayers from receiving or renewing passports.

          

Private Debt Collection – New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.

      

Field, Office and Correspondence Audits – During this period, the IRS will generally not start new field, office and correspondence examinations. We will continue to work refund claims where possible, without in-person contact. However, the IRS may start new examinations where deemed necessary to protect the government's interest in preserving the applicable statute of limitations.

    

  • In-Person Meetings - In-person meetings regarding current field, office and correspondence examinations will be suspended. Even though IRS examiners will not hold in-person meetings, they will continue their examinations remotely, where possible. To facilitate the progress of open examinations, taxpayers are encouraged to respond to any requests for information they already have received - or may receive - on all examination activity during this period if they are able to do so.

  • Unique Situations - Particularly for some corporate and business taxpayers, the IRS understands that there may be instances where the taxpayers desire to begin an examination while people and records are available and respective staffs have capacity. In those instances when it's in the best interest of both parties and appropriate personnel are available, the IRS may initiate activities to move forward with an examination -- understanding that COVID-19 developments could later reduce activities for an agreed period.

  • General Requests for Information - In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time if possible.  

         ​

Earned Income Tax Credit and Wage Verification Reviews – Taxpayers have until July 15, 2020, to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income. These taxpayers are encouraged to exercise their best efforts to obtain and submit all requested information, and if unable to do so, please reach out to the IRS indicating the reason such information is not available. Until July 15, 2020, the IRS will not deny these credits for a failure to provide requested information.

          

Independent Office of Appeals – Appeals employees will continue to work their cases. Although Appeals is not currently holding in-person conferences with taxpayers, conferences may be held over the telephone or by videoconference. Taxpayers are encouraged to promptly respond to any outstanding requests for information for all cases in the Independent Office of Appeals.

             

Statute of Limitations - The IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes. Otherwise, the IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.

Go To COVID-19 Index

           

Strive Tax & Accounting, LLC reminds readers that the information which is summarized herein is for general and informational purposes only, it is not legal advice. It does not take into account your specific circumstances and should not be acted on without full understanding of your current situation and future goals and objectives by a fully qualified financial advisor. In doing so you risk making commitment to a product and/or strategy that may not be suitable to your needs.

   

While we have tried to ensure the accuracy and completeness of the contents of this website, Strive Tax & Accounting, LLC cannot offer any undertaking or guarantee, either expressly or implicitly, including liability towards third parties, regarding how correct, complete or up to date the contents of this website are. We reserve the right to supplement this website at any time or to change or delete any information contained or views expressed on this website.

Please consult us or your legal professionals regarding any specific matters related to the CARES Act that may affect your firm and its portfolio companies.

       

Strive Tax & Accounting, LLC accepts no liability for any loss or damage howsoever arising out of the use of this website or reliance on the content of the website.

 Our primary goal as a trusted advisor is to be available and to provide insightful advice to enable our clients to make informed financial decisions.

Continually striving for accuracy, excellence and the highest level of integrity.

Strive Tax & Accounting, LLC

CPA's specializing in small business tax and accounting with emphasis in construction and manufacturing for corporation and passthrough entities.

PO Box 28353

Green Bay, WI 54324

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