Friday, March 27, 2020, President Trump signed the important relief providing Coronavirus Aid, Relief and Economic Security Act (CARES Act). This timely piece of legislation was designed to provide financial relief for many sectors of society in the United States.
The financial burden that has impacted individuals, companies, the government and the interplay of these areas, both within and outside the US, has been front page news almost since the discovery of the Coronavirus, COVID-19 (C-19) in the world—and more focused--in the US.
As reported by many groups, such as the Tax Foundation, the CARES Act, what is often labeled as the 3rd of such Coronavirus Acts, expanded the prior two Acts; it provides trillions of dollars of relief in many areas of the US economy. (The prior two Acts, HR 6074, Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, allowed 8.3 billion for emergency funds and the Families First Coronavirus Response Act, HR 6201, covering free Coronavirus testing, 14 paid days of leave for workers, etc. helped support the funds needed to undertake the continued attack against COVID-19.)
The CARES Act (3rd Act) allows for more unemployment insurance, provides for payments to individuals to help offset their need for funds during the pandemic, and created other tax benefits, such as
allowing an above line deduction of up to $300 for taxpayers that qualify. (This deduction, if qualified, can apply even if one claims the standard deduction and does not itemize on the taxpayers tax return.)
CARES Act also provided other tax benefits, such as allowing the use of net operating losses (NOL) to be carried back for five years and not just requiring the NOL be carried forward. Such change allows for tax refunds to qualified taxpayers.
Other business benefits under the CARES Act include possible payroll tax credits on some wages, delivers other technical corrections that were needed as a result of issues under the TCJA of 2017, suspended some excise taxes, and otherwise affords tax relief to help individuals and businesses during the pandemic crisis. Much of the relief under the Act is designed to provide cash flow for businesses and individuals that face liquidity issues because of the lack of income coming in and the increase in expenses because of the COVID-19 attack.
Look for additional legislation to be passed in the near future to support additional financial needs to combat COVID-19.
By
Dr. Mark Lee Levine,
Professor, University of Denver
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