CARES Act: What is it and how might it impact you?

  • Souders Financial Group

Last week, the United States Congress passed, and President Trump signed, the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is a $2 Trillion emergency fiscal stimulus package that aims to bridge and ease the effects of the Coronavirus on the US Economy. The bill has provisions for loans, payments and tax credits aimed at helping individuals, businesses, and municipalities meet short-term cashflow needs. While the bill is hundreds of pages in length, here are a few things we believe our clients should be aware of.

Direct Payments

  • Individuals who had up to $75,000 in adjusted gross income and married couples with up to $150,000 in adjusted gross income will qualify for full direct payments. Individuals who qualify will receive $1,200 and married couples will receive $2,400. Additionally, qualifying taxpayers will receive an additional $500 for each qualified child. Individuals and families above the AGI threshold will see their relief payments reduced by $50 for every $1,000 in AGI. Please note that the AGI is based off of the most recent tax filing. If you have not filed your 2019 taxes yet, the AGI will be based off of 2018 taxes. The benefit amount is completely phased-out for single taxpayers with AGI exceeding $99,000 and $198,000 for joint filers.

Retirement Plan Provisions

  • The CARES act allows for an elimination of the 10% early withdraw penalty from retirement accounts for so-called "Coronavirus-Related Distributions". The act also allows taxation of said distributions to be spread over three tax years with the ability to recontribute back into the respective account.
  • All Required Minimum Distribution (RMD) requirements for 2020 will be suspended for those who were previously required to take them.
  • Coronavirus-related distributions are available to those who:
    • Are diagnosed with COVID-19 or SARS-CoV-2 illness.
    • Have a spouse or dependent who is diagnosed with the illness.
    • Experience “adverse financial consequences” as a result of a quarantine, furlough, lay-off, reduction in work hours, business, closure, the lack of childcare, or other factors determined by the IRS due to the coronavirus emergency.

Small Business Administration and Business Loans

  • Small businesses with up to 500 employees will be able to take out loans, up to $10 million depending on payroll and other costs. The loans are eligible for forgiveness if used to cover payroll and certain operating expenses such as rent and utilities. Qualifying businesses will also be eligible for "employee retention" tax credit opportunities.
  • Loans are also available to self-employed individuals.
  • These expanded loans will be administered by banks and other financial institutions. Businesses should contact their banker(s) for more information.
  • Other benefits include a delay in current year business payroll taxes until 2021 and 2022.
  • The bill also provides $454 billion in emergency lending to states, municipalities and to businesses that are critical to US national security.
  • For any impacted small businesses—including those who are self-employed—we encourage you to download and read the Small Business Owner’s Guide to CARES Act for more information.


  • The CARES Act defers all Federal student loan payments until September 30th, 2020.
  • Unemployment benefits have been expanded to those who would otherwise not qualify (self-employed and 1099 contractors).
  • Although not through the CARES Act, the Treasury has extended the tax deadline to July 15, 2020. This deadline also applies to any and all IRA contributions for the 2019 tax year.

Politics aside, we hope that this bill provides the American people and economy with a lifeline until we come out on the other side of the pandemic. We hope that you continue to take the CDC social distancing guidelines seriously and that you and your loved ones stay healthy and safe. As many have said, we are all in this together and together we will get through this.

Please know that we continue to here as a resource for you.

For informational purposes only. Not intended as legal, tax, or investment advice, or a recommendation of any particular security or strategy. Please contact your legal or tax professional for more information regarding your individual circumstances. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in the above commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. Past performance is not indicative of future results. For more information about Souders Financial Advisors, including our Form ADV Part 2A Brochure, please visit or contact us at 513-598-2400.