Important update: The CARES act was passed on Friday March 27, 2020. There are many different provisions of the law. It is a robust law. Here are a few items to note:

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• The stimulus checks – you have likely heard about the $1,200 checks that will be coming from the IRS if your income is under $75,000 for a single or $150,000 as a married couple. There are some phase outs for slightly higher income. Please note that this is a 2020 refundable credit and this money is an advance on that credit. If, for some reason, you do not get this check now or it is a reduced amount, it will be part of your 2020 tax return and any amounts that you were entitled to receive and didn’t, will be part of your 2020 tax return. It is unclear if you would have to pay back any amounts received in excess of what you should have.

• Please watch out for scammers. The IRS will not call or email you to verify your personal information nor charge any type of fee.

• Retirees who are required to take RMD (required minimum distributions) from their IRAs get a one-year break, and no RMD’s are required for 2020.

•  There is now an allowable charitable contribution of $300 regardless of whether, or not you itemize.

• Student loans – there is no interest on Government student loans, you can stop making payments on student loans through 9/30/20 and suspension of debt collection for student loans. Please note, this does not apply to private bank student loans.

• If you are laid off or cannot work as a self-employed person due to COVID-19, we are recommending that you apply for unemployment.  https://www.uc.pa.gov/unemployment-benefits/file/Pages/File%20an%20Initial%20Claim.aspx  It is a new opportunity for self-employed to potentially qualify for unemployment. The PA UC system cannot yet accept those claims. Stay tuned for more information on how to collect.

• For our business owners (sole proprietors included), there is a huge opportunity to apply for an SBA Economic Injury Disaster Loan Program as well as the Payroll Protection Program loans associated with the CARES act. This will be administered through banks who are qualified to do so. We are recommending that you do the following:

  • Reach out to your bank and see if they are an authorized SBA lender. If they are not, let us know and we will get you in touch with one.

  • Make sure your books and records are up to date for 2019 and currently in 2020. If you need assistance with that, let us know.

  • Here is a link prepared by the US Chamber of Commerce to give you a checklist of how to apply for the loan. https://www.uschamber.com/co/start/strategy/applying-for-sba-disaster-relief-loan

  • Here is the specific list of items that will be needed. https://07dd55c0-8d7b-447d-a871-f6d3a8e2c4e0.filesusr.com/ugd/133fad_cc248561c3014c14afc3ae7ca3499658.pdf (this is a link to a specific item on the https://www.connollysteele.com/resources

  • Some of the PPP loan may be forgiven, effectively making it a grant rather than a loan

• For our payroll clients – we will be reaching out with a questionnaire for you to provide us with the information we need to make sure that you are able to take advantage of the payroll tax credits that are now available. If you are not a payroll client, you should reach out to your payroll processor to ask for more information.

 

We anticipate that there will be a lot of clarification coming in the upcoming weeks on this tax law. There have been 3 laws passed in the last 2 ½ weeks. We are getting our arms around it and working to finalize the 2019 tax returns that we have in the door. Please reach out to us if you have a specific need, and we will do our best to address your questions.