Coronavirus Response – CARES Act Tax Provisions

Updated March 27th – President Trump has signed the CARES Act after it passed in the House.

The Senate recently introduced the CARES Act (Bill 3548), the 3rd phase of the Federal government’s response to the coronavirus pandemic. The bill contains a number of tax-related stimulus measures, in addition to providing healthcare support and general economic relief.

Stimulus Checks: The bill proposes to provide immediate cash payments to certain individual taxpayers. The payments will phase out for higher income taxpayers. Payments will be completely phased-out for taxpayers with Adjusted Gross Income over $99,000 (single) or $198,000 (joint return). The phaseout is increased by $10,000 for each qualifying child under age 17. Income will generally be determined based on 2018 tax filings.

Deadline Extensions: The bill would extend the April 15th filing deadline for 2019 returns until July 15th (previous measures only deferred payments). This is in line with the deadline extension recently announced by Treasury Secretary Mnuchin. Under a previous version estimated payments would be deferred until October 15th, this provision was not included in the final bill.

Other Provisions: The bill also contains other tax law changes for individuals and businesses. Many provisions will affect 2019 filings, and some are retroactive to periods before 2019, including technical corrections to the 2017 Tax Cuts and Jobs Act. Some of the tax related provisions included in the bill are:

  • Modifications to charitable contribution deduction limits
  • Relaxed rules for use of retirement plan funds
  • Suspension of IRC 461 excess business losses rules
  • Carryback of net operating losses
  • Suspension of net operating loss 80% taxable income limitation
  • Increase in IRC 163(j) interest expense limit from 30% to 50% (special rules apply to partnership returns)
  • Suspension of corporate refundable AMT minimum tax credit limitations
  • 15 year life for qualified improvement property

Hertzbach will continue to provide updated information as it becomes available.

The CARES Act – A Full Summary