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How will the Coronavirus Stimulus Bill Assist Me and My Small Business?

Posted by Cody Moore | Mar 26, 2020 | 4 Comments

 

Downtown 20moscow 20idaho
Main Street Moscow Idaho

UPDATE: After some consternation, the bill passed the house and was signed by the President yesterday.  The information below is unchanged. 

The U.S. Senate unanimously passed a two trillion dollar stimulus bill last night (H.R>. 748).  A copy of the bill is here.. The bill must go back to the House of Representatives, but is expected to pass and go into effect upon signature by the President.  

A giant bill like this – moving this fast – makes it difficult to fully grasp all the details but here is a digestible overview for individuals and small businesses in the Palouse LC-Valley region: 

Individuals

Direct Payments to most Americans: Individuals making up to $75,000 will receive $1,200 and married couples filing jointly making up to $150,000 will receive $2,400. Households with children are eligible for up to $500 per child. Families and individuals with incomes exceeding these figures will see phased out payments. These direct payments are technically advanced refundable tax credits, but the result for most people is effectively a payment. These payments are not available to non-residents.   

Expanded Unemployment Insurance: COVID-19 is causing  unemployment claims in historic numbers. In addition to unemployment benefits received on the state level, the current bill provides unemployed individuals n additional $600 per week for up to four months. These payments are deemed “Federal Pandemic Unemployment Compensation”.

No Early Withdrawal Penalty from Retirement Accounts and NO RMDS: **Qualifying individuals** will be able to withdraw up to $100,000 from qualifying retirement accounts without facing penalty for corona virus related expenses. Typically “early withdrawal” from certain retirement accounts comes with a 10% penalty, plus payment of any deferred taxes. Retirees are also not required to make required minimum distributions (RMDs), thus saving them from having to sell diminishing stock and assets during the economic downturn. Contact your financial advisor and your accountant before making any decisions. 

Employers 

Small Business Loan Forgiveness: Qualifying Businesses and non profit organizations will be able to borrow SBA backed loans, the principal of which will be forgiven so long as the money is used for qualifying costs such as payroll costs, mortgage, or rent obligations. The interest on these loans will still need to be repaid. These loans are available to businesses including sole proprietors and eligible self-employed, nonprofit organizations, veterans organizations, and Tribal businesses.

Payroll Retention Tax Credit: Qualifying businesses who do not opt to take part in the SBA loan program are still incentivized to keep employees on the payroll. Employers can get a tax credit of up to $5,000 per worker. However, this tax credit only appears to apply to businesses that can prove they suffered a 50% loss during the same quarter in the prior year until their gross receipts exceed 80% of receipts of the same quarter for the prior year. Employers with 100 employees or less qualify for the credit for all employees. Employers with more than 100 employees qualify for the credit on a more restricted basis.

Deferment of Payroll Taxes for Self Employed/Employers:  Employers will be able to defer a portion of their payroll/self employment tax payments for the rest of 2020 and pay it back over the next two years.  

Employer Incentive to Pay Employee Student Loans: Employers are incentivized to pay up to $5,250 toward employee student loan payments, tax free for one year.

Distilleries

Distilleries to the Rescue: Your favorite booze bottler gets an excise tax exemption for the spirits it uses to make hand sanitizer (following FDA guidelines).

This summary does not cover everything in the bill. There are many other programs affecting specific industries as well as hospitals, SNAP benefits, and education. 

About the Author

Cody Moore

Cody Moore is a partner with W+R+M. He practices in the areas of civil litigation, real estate, business, landlord tenant, and collections.

Comments

Lorrie Williams Reply

Posted Mar 26, 2020 at 08:26:34

I appreciate the information being broken down like this! It is hard capturing important things when reading all the information coming from all the different sources.

Nancy Yorinks Reply

Posted Mar 26, 2020 at 09:38:02

What a great summary – thanks so much for this!

Brandy Sullivan Reply

Posted Mar 26, 2020 at 12:03:11

Thank you for this!! Does the payroll retention tax credit come from payroll taxes?

Michael Turk Reply

Posted Mar 26, 2020 at 12:29:30

Thanks very much for the stimulus bill summary – it is helpful!

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