While much of the recent legislation in response to COVID-19 is focused on providing immediate cash flow assistance to business, here’s what employees can expect from the new laws:
The CARES Act provides for immediate cash in the form of advance credit payments to individuals. Under this provision taxpayers are eligible to receive up to $1,200 ($2,400 if Married Filing Joint) plus an additional $500 per qualifying child. These amounts begin to phase-out for taxpayers with adjusted gross income in excess of specified amounts. ($150,000 MFJ; $112,500 Head of Household; $75,000 all other taxpayers). Advance refund checks will be issued to taxpayers based upon their 2019 tax return, or their 2018 tax return cases where the taxpayer has not yet filed for the 2019 tax year. No action is required by taxpayers to receive this money – checks will either be deposited electronically (if direct deposit information is available on your current tax return) or mailed to the last address on your income tax return.
Access to funds in retirement plans and IRAs
The CARES Act allows taxpayers to more readily access funds held in retirement plans and IRA’s by allowing up to $100,000 in distributions related to coronavirus be withdrawn from these plans without an early withdrawal penalty. Distributions paid back within a three-year period will be treated as having met the eligible rollover rules normally applicable. Distributions that are not repaid in three years are includable in taxable income equally over a three year period beginning with the taxable year of receipt. The Act also provides for an increase in the amount of allowable loans from qualified retirement plans from $50,000 to $100,000.
Expanded unemployment benefits
The CARES Act provides for expanded unemployment benefits which will be made available primarily through existing state programs. A link to state unemployment programs, as well as other helpful information, is provided on the Department of Labor’s Coronavirus page at https://www.dol.gov/coronavirus.
Extended FMLA provisions under Families First Act
Emergency sick pay will be provided for up to 10 days for an employee who is unable to work or telework, due to quarantine or self-quarantine, experiencing coronavirus symptoms and seeking a medical diagnosis, caring for a quarantined or selfquarantined individual, or caring for a child due to closure of the school or child care provider relating to coronavirus.
Family medical leave pay to care for child if the school or childcare provider is closed due to the coronavirus emergency.
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