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How Does the 2020 CARES Act apply to you?

April 02, 2020

Last week Congress passed the 2020 CARES Act, the name being an acronym for the Coronavirus Aid, Relief, and Economic Security Act. The $2.2 trillion-dollar program is the largest economic stimulus package in United States history. The bill provides economic relief and stimulus programs for individuals, small businesses, corporations, state and local governments, hospitals and other public health providers. It is anticipated to have an economic impact as high as 7 trillion dollars through the use of grants and other indirect funding programs.

The information provided here has been aggregated from multiple sources.  The SFM team and ProEquities believes the information herein to be accurate. Each section of the law has much more detail than is provided here.  Investors are encouraged to research further on their own and consult their tax professional for further clarification or potential qualification for these programs.

Impact to Individuals

Direct Payments to Individuals (estimated $300 billion)

  • $1,200 to individual tax filers with less than $75,000 in adjusted gross income (AGI) Individual payment phaseout to a cap of $99,000
  • $1,200 to head of household filers with less than $112,000 in AGI
    Head of Household phaseout up to $146,000
  • $2,400 to married couples filing joint tax returns with less than $150,000 AGI Married Filing Jointly phaseout up to $198,000
  • $500 additional for each dependent child
  • 2019 AGI will be used for those who have filed 2019 tax returns, otherwise 2018 AGI will be utilized to calculate cash payment. It is recommended recipients verify their direct deposit information provided to the IRS if applicable.
  • Recipients who use 2018 AGI but have a lower AGI in 2019 will receive additional relief as a tax refund when they file. Overpayments based on 2018 (recipient saw decreased eligibility due to increase 2019 AGI) will not be clawed back by the IRS.

Other Individual Changes

  • Extends 2019 tax filing and IRA contribution deadlines to July 15th
  • Waives distribution requirements for all 2020 RMDs. Also applies to beneficiary and
    stretch IRA’s with special provisions to extend the distribution schedule by 1 year.
  • Waiver of premature distribution penalty from qualified retirement accounts for those affected in any way by COVID-19. Waiver of 20% mandatory federal withholding from ERISA accounts.
  • Funds distributed from retirement accounts can be rolled back into qualified status with 3 years of distribution. Ordinary income tax liabilities on distribution can be spread evenly over 3 years if not rolled back into qualified account.
  • Health insurance plans are required to cover treatment for COVID-19 and cannot charge for COVID-19 tests.
  • Increase in unemployment benefits up to an additional $600 per week for 4 months & adds 13 additional weeks of unemployment insurance to all plans. 1099 employees may now qualify for benefits under the new bill as well.
  • Increases insurance coverages of Telehealth services in Medicare, which bolsters ease of access to medical consultation for many more individuals. Prior to this, physicians could not receive payment from Medicare/Medicaid for Telehealth patient consultations.
  • Employers may provide up to $5,250 for student loan repayment to employees without causing the amount to be taxable income to the employee.

Business, Public Health, & Other Provisions Small Businesses

  • Paycheck Protection Program (est. $350B)
  • Expands SBA loan eligibility and creates favorable loan provisions including a forgivable loan amount of 2.5x average monthly payroll to a cap of $10 million with a maximum interest rate of 4%
  • Ties forgiveness of loans directly to employee retention, incentivizing small business to avoid layoffs.
  • Waives personal guarantee and collateral provisions on many small business loans up to $200k
  • Debt payments may be deferred in come cases up to a full year and some debt may be forgivable.
  • Provides $17B to relieve up to 6 month of payments for current outstanding SBA loans.
  • Emergency grants up to $10,000 to cover immediate operating expenses
  • Additional unemployment coverage and SBA eligibility for freelance and gig workers and other 1099 self-employed persons.
  • Refundable tax credit for up to 50% of payroll tax for affected employers, also directly tied to employee retention
  • Larger allowance for tax deductions for interest, operating losses, and capital depreciation

Corporations / Large Businesses

  • $500 billion in lending programs to large businesses
  • $58 billion allocated to passenger and cargo airlines
  • Ban on corporate stock repurchases for a period of 12 months after the loans are fully repaid and dividend and stock distributions to shareholders are suspended during this time.
  • Members of congress, the president, vice president, and cabinet, as well as any family members of the mentioned parties are barred from receiving any economic benefit extended to corporations.
  • The CARES Act creates a “special inspector general” to provide oversight of all lending programs and all aspects of the bill that uses taxpayer funding.

Public Health Initiatives

  • $100 billion provided to hospitals actively engaged in COVID-19 response
  • $1.3 billion for community health centers that provide care for an estimated 128 million people
  • $11 billion for drug development including testing, treatments, and vaccine development
  • $4.3 billion in additional funding to the Center for Disease Control (CDC)
  • $20 billion allocated to veterans health care
  • $16 billion allocated to develop Strategic National Stockpile of equipment including ventilators, masks, and other protective equipment.

Other Funding

  • $15.5 billion in additional funding for the Supplemental Nutrition Assistance Program (SNAP)
  • $8.8 billion for schools to provide meals to students
  • $450 million allocated to food banks and distribution programs
  • Temporary student loan deferment through September 30th for all federal student loans
  • New grants and loans available for arts programs, and universities


“The Coronavirus Aid, Relief, and Economic Security Act (“Cares Act”) Is Enacted Into Law”. Foley & Lardner LLP. 3/27/2020.

“What’s Inside The Senate’s $2 Trillion Coronavirus Aid Package”. NPR. 03/26/2020.

“Summary of the Coronavirus Aid, Relief, and Economic Security (CARES) Act”. CPA Practice Advisor. 3/29/2020.

“Congress Passes CARES Act: Overview of the Relief Available to Small and Other Business Concerns”. Greenberg Traurig. 3/28/2020.

“The CARES Act is Enacted Into Law” Legislative Update. Retirement Plan Concepts & Services, Inc. 03/30/2020.

“2020 CARES Act: Understanding the key elements of the $2 trillion stimulus package”. Oppenheimer Asset Management. 3/27/2020.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.