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IRS Tax Relief: COVID – 19 Corona Virus

Major tax relief included in COVID-19 stimulus act agreement (03-25-20)

The Senate reached agreement on the Corona virus Aid, Relief, and Economic Security (CARES) Act stimulus bill last night, with a vote expected in the Senate today and a House vote today or tomorrow. It’s expected that the President will sign the bill. Key tax provisions include:

  • Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) and will be “rapidly advanced;”
  • The delay of employer payroll tax deposits for 2020 (50% due by December 31, 2021, and 50% due by December 31, 2022);
  • A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;
  • The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;
  • A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;
  • Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);
  • A temporary waiver of RMD requirements in 2020;
  • The suspension of charitable contribution limits for 2020;
  • The deferral of excess business loss limitations until 2021;
  • An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;
  • An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;
  • The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and
  • A COD exclusion of small business loans forgiven under the Act.
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