Due to COVID-19, the IRS is currently not able to process individual paper tax returns. Paper returns will be processed by the IRS once processing centers are able to reopen but you should e-file if possible. If you’ve already filed via paper and it hasn’t been processed yet, don’t file a second tax return. For more info, visit the IRS.
The Coronavirus Aid, Relief and Economic Security Act (CARES) — a $2 trillion stimulus package to provide financial relief to individuals, families and businesses — has been signed into law. The 2020 coronavirus stimulus package will deliver relief through a range of measures, including an advanced tax rebate to taxpayers.
Stimulus checks — up to $1,200 for individuals, $2,400 for joint taxpayers and an additional $500 for each qualifying child under 17 — will be based on information from your most recent tax filings, either 2019 or 2018 if you have not yet filed this season.
According to the IRS, approximately 80% of Americans will be eligible to receive full or partial stimulus payments through the CARES Act.
If you have an adjusted gross income (AGI) of up to $75,000 ($150,000 married filing jointly), you should be eligible for the full amount of the recovery rebate.
* Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 8b of your 2019 Form 1040.
As your AGI increases over $75,000 ($150,000 married filing jointly), the stimulus amount you get will go down. The stimulus check rebate completely phases out at $99,000 for single taxpayers, $136,500 for those filing as Head of Household and $198,000 for joint filers with no kids.
The stimulus check will be paid this year based on information from your most recent tax return and will be reconciled in tax year 2020 to ensure you received the correct rebate amount. If you are underpaid based on your 2020 income you may receive more credit. If you are overpaid you don’t have to pay it back.
For those that aren’t required to file a tax return, TurboTax launched a Stimulus Registration Product to help you submit all the necessary information to the IRS so that you can quickly and easily get your money.
Under the CARES Act, employers can still make student loan payments on behalf of their employees on a tax free basis, up to $5,250 annually. This means the loan payments would be excluded from the employee’s income. The provision is applicable on loan payments an employer makes from the day the bill was signed into law (March 27, 2020) through January 21, 2021.
Unemployment payments will be increased by $600 weekly for four months through July 31, and the bill also includes those who were previously not eligible for unemployment, including part-time employees, freelancers, independent contractors, gig workers, and the self-employed.
The Small Business Administration’s loan program is now accessible to more businesses and has an increased cap on loans. This Act provides $349 billion for the Small Business Administration to distribute through a new loan program titled the Paycheck Protection Program (PPP), making non-profits, self-employed individuals and contractors eligible to receive assistance.
The Federal Reserve lending program will also receive $454 billion in support — loans from this fund will be for no longer than 5 years and will be aimed at aiding nonprofits and businesses with around 500–10,000 employees with the goal of retaining at least 90% of their workforce with full compensation and benefits.
If you need to take money out of your retirement plan ASAP, keep in mind that the 10 percent early withdrawal penalty may be waived on up to $100K of retirement funds withdrawn if you are a qualified individual impacted by Coronavirus. You are a qualified individual if:
- You, your spouse, or dependent are diagnosed with Coronavirus
- You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
- You had hours reduced due to Coronavirus
- You are unable to work due to your child care closing or reducing hours
Additionally, income attributable to such distributions would be subject to tax over three years, and you may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.
Employers, including the self-employed, can delay the payment of the employer portion of the Social Security payroll tax for the remainder of the year and pay back the liability over the next two years.
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Be sure to keep checking back here for the most up to date tax information and changes in response to COVID-19.