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The CARES ACT - Relief for Americans Affected by COVID-19

Late Wednesday night in Washington, a bipartisan compromise was reached approving a $2.2 trillion package called the Coronavirus Aid, Relief and Economic Security Act — or CARES Act designed to help businesses, individuals and the healthcare industry ravaged by the coronavirus. As a professional fiduciary, Attorney Connelly followed this legislation closely as it wound its way through the Senate.


"This will be a shot in the arm for so many Americans whose lives have been turned upside down by a plunging stock market and a loss of employment," said Attorney Connelly. "For our small business clients, there is help for them in this legislation. Most were doing well as the economy chugged away on all cylinders. The majority of them hired more people and some invested in capital improvements only to have everything come to a crashing halt. This bill will help them recover quickly."


What does the CARES Act provide to individuals and businesses? Let's check out some of the highlights, which include direct cash payments to individuals and families.


Who Qualifies for Payments

Under this bill, those earning up to $75,000 annually will be eligible for a $1,200 check plus another $500 per child. Reduced checks will go to those making up to $99,000 (the payment amount falls by $5 for every $100 in income above $75,000). For married couples, they will be eligible for a payment of $2,400 if their adjusted income is under $150,000. Reduced checks are also available here as well, with the sliding scale going up to $198,000. These couples will also receive a $500 check for every child under 17.


Head of Household

For those who file as head of household, in most cases single parents with children, they are eligible to receive $1,200 if they have earnings up to $112,500 annually. This is also on a sliding scale for reduced checks up to $136,500. Heads of households will also receive an additional $500 for every child under 17.


When Will It Come

Treasury Secretary Mnuchin wants the first payments to arrive for Americans during the week of April 6. Although many in the government think this plan is ambitious, a more realistic estimate is that the money will begin arriving by the end of April.


How Will it Come

If you have filed a tax return with the federal government using direct deposit for refunds, the money will arrive that way. For others, it will arrive by mail, which may take longer.


What About Social Security Recipients

They will also receive the payment as long as their income follows the same guidelines as listed above. For those Americans who do not file a tax return because their income is too low, they will receive their payment the way they receive their Social Security retirement, SSI or SSDI payment.


Who Is Not Eligible

Those not receiving any money include individuals above the income guidelines, "nonresident aliens" (foreigners without a green card) and those who are considered dependents (claimed on another’s tax return).


Is This Taxable

No, but there is a catch. Under the bill, it’s the 2020 income that serves as the qualifying amount. So if someone ends up earning over $99,000 but receives a payment, they may need to pay back the $1,200.


Unemployment Benefits

There is some good news here for self-employed people. In most cases, those who are independent contractors usually don’t qualify for unemployment benefits, but under this act, this has changed. Unemployment has been expanded to provide payments to self-employed workers and independent contractors. The bill also extends benefits for an additional 13 weeks and includes an additional $600 a week on top of the state benefits for up to four months. Anyone who becomes sick and is ordered to be quarantined is also eligible for unemployment. Student Loans

The U.S. Department of Education is allowing anyone with a federal student loan to suspend paying their loans for 60 days without accruing interest. Whether you suspend your loan or not, all loans will also have a 0% interest rate for at least 60 days. To suspend your loan, you’ll have to call your loan provider. Support for Small Business

Small business is the backbone of this economy and was thriving until the virus hit America's shores. Keeping these businesses ready and their employees attached to them is critical once we get past this pandemic. The CARES Act authorizes up to $370 billion in emergency lending designed to keep small businesses ready to jump into action after the COVID-19 shutdown.


Small businesses will be eligible to receive loans capped at 2.5 times their monthly payroll expenses, this includes those businesses whose employees rely on customer tips, but it does exclude those employees earning six-figure incomes. And this is the important part - the balance of these loans would be completely forgiven if a business maintains salary and benefits for its employees, meaning that these payments will act as direct subsidies rather than loans being paid back to the taxpayer.


Small businesses can also avail themselves of a refundable “employee retention” tax credit that would offset the cost of employment taxes (such as the employer-side payroll tax) during the period in which their operations are fully or partially suspended by the coronavirus crisis. The credit could be applied to all wages for employers with fewer than 100 employees, while the benefit is capped at $10,000 in wages per employee for larger employers.


The CARES Act includes $349 million for the U.S. Small Business Administration (SBA) to guarantee loans through its 7(a) loan program. The SBA is also offering Economic Injury Disaster Loans for qualifying small businesses. These are low-interest loans with terms potentially as long as 30 years for small businesses and nonprofits. Business owners can apply for a loan through the SBA website.


Finally, President Trump has not ruled out another round of payments for taxpayers later in the year if the economy is sputtering. In any case, this may be what America needs to move past the COVID-19 pandemic.


The author, Don Drake, oversees Connelly Law's Community Education Programming. He is a retired licensed clinician in the Commonwealth of Massachusetts with over three decades of experience working with older adults diagnosed with HIV/AIDS, substance abuse disorders, chronic homeless and mental illness. Prior to his retirement, he was the director of a unique treatment program for older adults with histories of mental illness, cognitive disabilities, and addiction at Shattuck Hospital in Boston. He was also a director at Steppingstone, Inc. in Fall River, Massachusetts where he was the clinical trainer, program and curriculum developer for the agency and oversaw treatment programming for older adults. He has over 40 years of human service and law enforcement experience and has worked as an administrator at programs in Boston, Hartford, Providence, and Philadelphia, helping to structure, hire and train staff in providing behavioral and addictions treatments for adolescents and adult clients. Drake also worked as a trainer for the Massachusetts Department of Public Health presenting training on QPR, a suicide prevention curriculum for the general public, the Massachusetts Council for Problem Gambling and the Crisis Prevention Institute, an international training organization that specializes in the safe management of disruptive and assaultive behaviors. He is also a retired professional wrestler who is in the New England Professional Wrestling Hall of Fame. Drake can be reached at Connelly Law Offices, Ltd. atddrake@connellylaw.com

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