The Coronavirus Aid, Relief and Economic Security (CARES) law, HR 748, which was passed Wednesday by a 96-0 vote against the Senate, contains a multitude of tax measures as part of a package $ 2 trillion aid to help the economy. Because he is suffering from the effects of the coronavirus pandemic. Although the legislation does not focus on taxation, a large number of tax provisions are included in the bill of more than 600 pages. [Update: The House of Representatives adopted the bill by voice vote on Friday March 27, and President Donald Trump signed it this afternoon.]
Recovery refunds: The bill provides for payments to taxpayers - "recovery discounts" - which are treated as early refunds of a 2020 tax credit. Under this provision, individuals will receive a refund credit '' tax of $ 1,200 ($ 2,400 for joint tax filers) plus $ 500 for each eligible child. The credit is phased out for taxpayers with adjusted gross income (AGI) greater than $ 150,000 (for joint tax filers), $ 112,500 (for household heads) and $ 75,000 for other individuals. Credit is not available to non-resident foreigners, individuals who may be claimed as dependents by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of credit available on their 2020 tax return by the amount of the prepayment they receive.
Refunds of payroll tax credits: The bill provides for the early repayment of payroll tax credits passed last week in the Families First Coronavirus Response Act, P.L. 116-127. The required paid sick leave credit and the required paid family leave credit can be reimbursed in advance using the forms and instructions the IRS will provide. The IRS is responsible for waiving any penalty for failure to file payroll taxes under Sec. 3111 (a) or 3221 (a) if the failure was due to a planned salary tax credit.
Employee retention credit: The bill creates an employee retention credit for employers who are closing due to the coronavirus pandemic. Eligible employers are entitled to an employment tax credit equal to 50% of eligible wages (up to $ 10,000 in wages) for each employee. Eligible employers are employers who carried on a business or a business in 2020 and for whom the operation of this business is totally or partially suspended due to orders from a government authority limiting trade, travel or meetings of group due to the COVID-19 epidemic. Employers whose gross receipts represent less than 50% of their gross receipts for the same quarter of the previous year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter of l 'last year. For employers with more than 100 employees, the wages eligible for the credit are the wages that the employer pays to employees who do not provide services due to the suspension of the business or a decrease in gross revenues. For employers with 100 or fewer employees, all wages paid are eligible for the credit. However, for credit purposes, allowable wages do not include wages counted for the purpose of paid sick leave and payroll tax credits paid for family leave in the Families First Coronavirus Act . In addition, if an employer receives a loan covered by a paycheck protection program under section 1102 of the Act, he is not eligible for a retention credit for employees.
Retirement plans: taxpayers can withdraw up to $ 100,000 of coronavirus distributions from retirement plans without being subject to Sec. 72 (t) 10% additional tax for early distributions. Eligible distributions can be taken until December 31, 2020. Distributions related to the coronavirus can be reimbursed within three years. For these purposes, an eligible taxpayer is one who has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or who is experiencing financial hardship as a result of quarantine, leave or layoff, or who has had their work hours reduced, or who is unable to work due to lack of child care. Any resulting income inclusion can be taken over three years. The bill also authorizes loans of up to $ 100,000 from eligible plans and repayment may be delayed.
The bill temporarily suspends the minimum distribution rules required in Sec. 401 for 2020.
The bill delays the minimum contributions required from 2020 for single employer plans until 2021.
Deductions for charitable donations: The bill creates a deduction for charitable donations of higher level for 2020 (not exceeding $ 300). The bill also changes the AGI limits on charitable contributions for 2020, to 100% of the AGI for individuals and 25% of taxable income for corporations. The bill also increases the food contribution limits to 25%.
Delay on social charges: The invoice delays the payment of 50% of the employer's social charges for 2020 until December 31, 2021; the remaining 50% will be due on December 31, 2022. For self-employment taxes, 50% will be due only on these same dates.
Net operating losses: the bill temporarily repeals the limit of 80% of income for deductions for net operating losses for the years starting before 2021. For losses occurring in 2018, 2019 and 2020, a carryforward of five years is allowed (taxpayers can choose to waive the deferral)).
Limitation of excessive losses: the bill repeals Sec. 461 (l) limitation of excess loss. Second. 461 (l) was added to the Code by law known as the Tax Cuts and Jobs Act, PL 115-97, and it prohibits excessive business losses for unincorporated taxpayers if the amount of the loss exceeds 250,000 $ ($ 500,000 for married taxpayers who file jointly).
Alternative Minimum Business Tax (AMT): The bill amends the AMT credit for corporations to make it a refundable credit for the 2018 taxation years.
Limitation of interest: for taxation years starting in 2019 and 2020, Sec. 163 (j) is amended to increase the percentage of adjusted taxable income from 30% to 50%. In addition, taxpayers can choose to use 2019 income instead of 2020 for the calculation.
Qualified improvement property: The bill also makes technical corrections regarding the qualified improvement property under Sec. 168 by making it a 15 year old property.
Aviation taxes: various aviation excise taxes are suspended until 2021.
Health plans: The rules for high-deductible health plans (HDHP) are changed to allow them to cover telehealth and other distance care services without charging a deductible.
Over-the-counter menstrual care products are added to the list of items that can be reimbursed from a health savings account, an Archer medical savings account, or a health reimbursement agreement.
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