HSA Health Savings Account

COVID-19 Stimulus Tax Relief

The Senate reached agreement on the Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus bill this week, with a vote expected in the Senate and the House by the end of the week. It’s expected that the President will sign the bill. Some of the key tax provisions and major tax relief included in COVID-19 Stimulus Act Agreement include:

Tax credits

• 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;”

• 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. Also a 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. This is 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. This allows 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer)

• A COD exclusion of small business loans forgiven under the Act.

As more information becomes available, we will keep you updated. 

Please feel free to reach out to us if you have any questions or concerns about the major tax relief included in COVID-19 Stimulus Act Agreement.

Thank you.