The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 is an estimated $2.2 trillion package passed by U.S. lawmakers to help support individuals and businesses that have been impacted by the spread of coronavirus. This is the third aid package passed by Congress meant to keep affected businesses and individuals afloat during this economic disruption.

The package allocates approximately $560 billion dollars to individuals and $877 billion to businesses, both large and small, that are severely hit by the spread of this disease. The remainder of the nearly $2.2 trillion will support public health, state and local governments, education, and other safety net programs.

Below are some of the key changes that have been made to support individuals and small businesses.

• Tax return filing has been extended by the Internal Revenue Service and the Franchise Tax Board to July 15th, 2020.   Taxpayers can defer federal income tax payments due on April 15, 2020 to July 15, 2020 without penalties or interest. Income tax estimates for 1st and 2nd Quarter 2020 are also not due until the July 15th filing date.
• Required Minimum Distributions (RMD) are waived for 2020. An individual who has taken their RMD for 2020 can return it to their IRA, if desired.
• An individual can take a distribution from their IRA or 401k up to $100,000, penalty-free. The 10% early withdrawal penalty has been waived for people younger than 59 1/2. These distributions can either be repaid, or the income taxes paid over the subsequent three years.
• The government will make one-time cash payments of up to $1,200 per person, plus $500 per dependent child for families earning $150,000 or less. The payments phase out between $150,000 and $198,000 in earned income, based on 2018 or 2019 tax filings.
• Under the new legislation, gig workers, contract workers and freelancers will now be eligible for unemployment benefits. The legislation also adds $600 per week on top of the amount a worker receives from the state. This additional payment will last up to four months.
• Small businesses can receive up to $10,000 for emergency funds for operating costs. Additionally, there is a $350 billion pool for loans up to $10 million that could be forgiven if the loan is used to maintain payroll, pay rent, or keep workers on the books, provided workers stay employed through the end of June.

This historic legislation was passed quickly in response to the unprecedented shock. How some of its provisions will be implemented is still uncertain.

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