Individual Income Tax

Rebates or “Stimulus Checks”

This is probably the most commonly misunderstood portion of the CARES Act due to the vast amount of misinformation circulating.

Under the CARES Act individuals will be allowed a refundable credit against 2020 income taxes, up to:

  • $1,200.00 for individuals, or
  • $2,400.00for couples filing jointly; plus an additional
  • $500.00 for each qualifying child.

This tax credit phases out as income increases. For individuals, the income cap is $75,000 and the income cap $150,000 for those filing jointly.

The IRS will “refund” the credited amount to taxpayers “as rapidly as possible” by using the amount allowed based on the 2019 tax filings if already filed, or 2018 if not. For taxpayers that have not filed in 2018 or 2019, the IRS can use information pulled from the Social Security Benefits Statements. The IRS may deposit the rebate directly into a bank account as designated by taxpayers since January 1, 2018.

Charitable Contributions

For taxpayers that do not itemize deductions, there will be an “above the line” deduction allowed of up to $300 for cash contributions.

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Employment And Labor

Just as it did in other areas, the CARES Act makes some clarifications to previous Corona related relief packages – including the Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act. Several of these clarifications note that the monetary leave benefits caps are peremployee and not an overall perday cap as some had previously believed. Further, the CARES Act clarifies that an employee is still eligible for EFMLEA even if they had worked at least 30 days of the last 60 days prior to being laid off and was subsequently rehired by the same employer.

Pandemic Unemployment Assistance Program

Under the CARES Act, a temporary Pandemic Unemployment Assistance program is created that is to last until the end of 2020. This includes an expansion of eligibility for unemployment benefits to individuals that usually wouldn’t have access to such safety nets. Some of these now covered groups include the self-employed, independent contractors, those that have used up state unemployment benefits, and those with a limited work history. However – if someone has the ability to telework with pay OR they are currently receiving paid leave benefits from their employer they are NOT covered by this unemployment expansion. More specific examples of covered individuals are outlined below:

  • An individual who is the primary caregiver for a child or other person in the household who is unable to attend school or another facility as a direct result of COVID-19;An individual who is unable to reach the place of employment because of a quarantine imposed as adirect result of COVID-19
  • An individual who is unable to work because a health care provider has advised the individual to self-quarantine due to COVID-19 concerns
  • An individual who has to quit his or her job as a direct result of COVID-19; or
  • An individual whose place of employment is closed as a direct result of COVID-19.

The Pandemic Unemployment Assistance program has also increased the time period of benefits from the usual 26 weeks up to 39 and gets rid of the typical one-week waiting period. The amount of benefits remains what state law usually prescribes, however there is a mandated increase of $600 on that amount per week up to four months.

The CARES Act also offers assistance directly to the States by giving them the chance to receive funding for state enacted “short-time compensation” programs that would subsidize workers that have experienced a reduced amount of hours in lieu of being laid off.

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