In an effort to give financial relief to business owners, workers, and taxpayers during the coronavirus pandemic, the federal government has issued an array of legislative and policy initiatives. Keeping up with the new laws and deadlines is as challenging as it is important. In an effort to help you (and me!) sort it all out, I wanted to publish this list of what you might need to know, with brief descriptions of each, and some links to more information. The links should help to provide a starting point for your own independent research. I hope you find it helpful regardless of the position you’re in during COVID-19.
1. The Federal/Arizona Tax Deadline Moved to July 15
The deadline for filing 2019 individual federal and Arizona income tax returns and paying 2019 income taxes has been extended from April 15, 2020, to July 15, 2020. Find federal tax information here and Arizona tax information here.
2. New Retirement Plan Withdrawal and Loan Rules
The CARES Act permits participants in certain types of retirement plans to make penalty-free withdrawals during the year 2020 of up to $100,000 from their plan and to request loans of up to $100,000 (within 180 days beginning March 27, 2020), if the withdrawal or loan is for a coronavirus-related reason. Find more information on the retirement plan withdrawal and loan rules here.
Qualified participants may elect to pay taxes on the amount withdrawn over a three-year period beginning with the tax year 2020, or they may avoid income recognition by repaying the distribution to the plan within three years of receipt.
3. There Are No Required Minimum Distributions (RMDs) for 2020
The CARES Act waives any required minimum distributions (RMDs) from certain defined contribution plans and individual retirement accounts (IRAs) for tax year 2020. This waiver includes any retirement account subject to RMDs, such as IRAs, 401(k)s, Roth 401(k)s and inherited accounts. Find a more in-depth explanation regarding Required Minimum Distributions here.
4. Paycheck Protection Program
The Paycheck Protection Program provides loans designed to provide a direct incentive for small businesses (including sole proprietorships and independent contractors) and private not-for-profit entities to keep their workers on the payroll, with the opportunity for forgiveness. Eligibility is based on whether the business was in operation on February 15, 2020, rather than on repayment eligibility. Find out more about the Paycheck Protection Program here.
5. Unemployment Benefits Have Increased
Unemployed workers (including self-employed individuals) may be eligible for $600 per week from the federal government (for four months), on top of unemployment insurance benefits paid by their state. Read more about the increase in unemployment benefits here.
6. Paid Sick Leave Expansion
Full-time employees may be entitled to up to 80 hours of paid sick leave, and part-time employees may be entitled to paid sick leave based on the average number of hours worked over a two-week period. This leave may be used immediately regardless of length of employment. Read more about the paid sick leave expansion here.
7. Family and Medical Leave Act Expansion
Employees may take leave for a “qualifying need related to a public health emergency,” defined as a need to care for a child under the age of 18 (due to school or child care closure). Read more about the FMLA expansion here.
8. Economic Injury Disaster Loans and Grants
Economic Injury Disaster Loans (EIDLs) of up to $2 million are available through the SBA to provide relief from economic injury caused directly by a disaster. Payment on such loans is deferred for one year. Read more in-depth about the Economic Injury and Disaster loans and grants available here.
9. Emergency Economic Injury Grant
An SBA Emergency Economic Injury Grant (aka “Advance Loan”) can provide up to $10,000 in disaster assistance to businesses (including sole proprietors and independent contractors). Businesses that apply and request the Advance Loan and are approved are expected to receive funding within three days. Read more about the Emergency Economic Injury grants available here.
10. Economic Impact (Stimulus) Payments
Eligible taxpayers will receive a stimulus payment for up to $1,200 if an individual, or $2,400 if married filing jointly, plus an additional $500 per child who is age 16 or under. Payments are subject to adjustment based on income. Read more about the stimulus payments here especially if you haven’t received yours yet.
11. Student Loan Payments Are Suspended
The CARES Act automatically suspends payment for student loans held by the federal government until September 30, 2020. In addition, Interest on certain loans owned by the federal government will be temporarily set at 0% through September 30, 2020. Read more about the temporary suspension of student loan payments here.
I hope you were able to find these helpful even for just a quick reference! Let me know in the comments how you’re doing during all of this.
