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To help individuals stay afloat during this time of economic uncertainty, the government will send up to $1,200 payments to eligible taxpayers and $2,400 for married couples filing joints returns.
Waiver of 10% Early Distribution Penalty
The additional 10% tax on early distributions from IRAs and defined contribution plans is waived for distributions made between January 1 and December 31, 2020 by a qualified individual.
Required minimum distributions that otherwise would have to be made in 2020 from defined contribution plans and IRAs are waived.
Charitable Deduction Liberalizations
The CARES Act makes four significant liberalizations to the rules governing charitable deductions.
The CARES Act expands the definition of expenses qualifying for the exclusion.
For plan years beginning before 2021.
Break for Nonprescription Medical Products
For amounts paid after December 31, 2019, the CARES Act allows amounts paid from Health Savings Accounts and Archer Medical Savings Accounts to be treated as paid for medical care even if they aren’t paid under a prescription.
Business Only Provisions
Eligible employers can qualify for a refundable credit against, generally, the employer’s 6.2% portion of the Social Security payroll tax for 50% of certain wages paid to employees during the COVID-19 crisis.
Delayed Payment of Employer Payroll Taxes
Taxpayers will be able to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022.
For NOLs arising in tax years beginning before 2021, the CARES Act allows taxpayers to carryback 100% of NOLs to the prior five tax years.
Deferral of Noncorporate Taxpayer Loss Limits
The CARES Act retroactively turns off the excess active business loss limitation rule of the TCJA in Code Sec. 461(l).
The CARES Act allows corporations to claim 100% of AMT credits in 2019 as fully-refundable.
Relaxation of Business Interest Deduction Limit
The CARES Act generally allows businesses, to increase the interest limitation to 50% of ATI for 2019 and 2020.
Technical Correction to Restore Faster Write-Offs for Interior Building Improvements
The CARES Act makes a technical correction to the 2017 Tax Law.
The CARES Act authorizes IRS broadly to allow employers an accelerated benefit of the paid sick leave and paid family leave credits.
The CARES Act gives single employer pension plan companies more time to meet their funding obligations.
Certain SBA Loan Debt Forgiveness Isn’t Taxable
Loans that are forgiven under the CARES Act aren’t taxable as discharge of indebtedness income.
Suspension of Certain Alcohol Excise Taxes
The CARES Act suspends certain alcohol taxes on spirits.
Suspension of Certain Aviation Taxes
The CARES Act suspends certain excise taxes on air transportation.
IRS Information Site
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** This information is provided for general educational purposes only. Before taking any action based on this information, we strongly encourage you to consult with a professional accounting advisor about your specific situation.