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UPDATE: March 26th - The Big New Bill From Congress That's Coming

You might have seen the news that Congress has agreed on the massive new stimulus bill, called the CARES Act.

A lot of you have been calling and writing us, asking for details. We wanted to send this out this morning, but I wanted to get more information before I did so. 

As of this writing, this is NOT YET SIGNED. But it is getting very close.

And it might help you VERY much, depending on your situation.

We will have more to say early next week, once we review the full bill. (It's 880 pages!)

And a reminder: we are still actively helping and serving clients in the midst of this crisis.

Please feel free to contact us. Because we are working remotely, you might not get us on the phone, but our email address can be found elsewhere on this website. Please shoot us an email if you have question.

ALSO: if you have friends who want to work with a tax firm that is staying on top of this stuff, and can help them navigate getting EVERYTHING they deserve under this bill, please feel free to send them our way.

You can forward them this quick email, or have them give us a call.

Anyway, here are a few highlights, to make sure you heard things clearly from the source:

The first one is huge.

Freelancers/Solopreneurs WILL be eligible for unemployment benefits. (!) At least as of now, and the devil is in the details (which is why we're here to help you), but from what I'm seeing, if your side-hustle or freelance business has been affected, you WILL get relief through this bill ... and it could be significant.

The feds seem to be leaving it up to the states as to how this will get deployed, which is why you will want someone in your corner for this.

The checks that you will receive (and how it's determined):

They landed on $1200 per adult and $500 per child - The NY Times reports its for children 16 and under, as we would suspect, because you need a child under 17 to get the full $2,000 Child Tax Credit under current law... but again, there are those pesky details.

There is an income phase-out -- $75k AGI for individual and $150k married/filing jointly and amounts begin to phase out. At the moment, they phase down $5 for every $100 earned about the $75K AGI, and similarly for married couples.

This will be based on either your 2018 return OR an already-filed 2019 return OR your Social Security SSA form.

They will be "cleaning this up" in 2020 tax returns via credits etc.

It appears that they will be direct-depositing the payments to the bank you have on file if you receive direct deposit refunds.  If not, they will send the check to the last mailing address from which you filed. 

Again, this is just a start. But I wanted to get this information to you ASAP so that we could start helping you.

That NY Times article I referred to above has an FAQ worth sharing. Again, this is not yet set in stone:

 

What if my recent income made me ineligible, but I anticipate being eligible because of a loss of income in 2020? Do I get a payment?

The bill does not appear to help people in that circumstance, but there are many other provisions in the legislation. You may be able to file for unemployment or for one of the new loans for small business owners or sole proprietors.

Would I have to apply to receive a payment?

No. If the Internal Revenue Service already has your bank account information, it would transfer the money to you via direct deposit based on the recent income-tax figures it already has.

When would they arrive?

Treasury Secretary Steven Mnuchin said that he expected most people to get their payments within three weeks.

If my payment doesn’t come soon, how can I be sure that it wasn’t misdirected?

According to the bill, you would get a paper notice in the mail no later than a few weeks after your payment has been disbursed. That notice would contain information about where the payment ended up and in what form it was made. If you couldn’t locate the payment at that point, it would be time to contact the I.R.S. using the information on the notice.

What if I haven’t filed tax returns recently, would that affect my ability to receive a payment?

It could. File a return immediately, at least for 2018, according to the I.R.S. website. “Those without 2018 tax filings on record could potentially affect mailings of stimulus checks,” the site says.

If you’re worried about money that you owe that you cannot pay, the I.R.S. recommends consulting a tax professional who can help you request an alternative payment plan or some other resolution.

Loans for small businesses

Apparently, if the bill does not change before it is signed, $366 billlion in loans and grants will  available for small businesses. Owners will be able to apply for them at the Small Business Administration's website.

Waiving Penalties for Early Withdrawals

Again, as is, if it does not change before it is signed, the IRS will waive the 10% penalty for early withdrawal from IRAs, 401(k)s, etc. The caveat is that it must be for reasons "related to COVID-19," which has yet to be defined, and must be $100K or less.

One more thing: Applying For Unemployment

This is huge.  If you are on unemployment, your benefits will be boosted by $600 a week. And, as I mentioned up top, workers who typically are not eligible for unemployment, like gig economy workers/independent contractors, may now be eligible, and it (also tentatively) adds 13 weeks of benefits if you have already exhausted your unemployment benefits.

You may be asking: "How do I even apply for unemployment?  I haven't been unemployed in decades! Or I have been self-employed and never was eligible before. What do I do? How do I do it?" 


The steps to file for unemployment vary by state. To find your state’s unemployment enrollment information, go to careeronestop.org, a site sponsored by the Department of Labor. Hover over “COVID-19 unemployment insurance info,” click “File for unemployment benefits,” scroll down, and select your state from the drop-down menu. Then you’ll get the links to follow to start your claim.

First you’ll be asked whether you qualify. If you’re unemployed through no fault of your own, such as lack of work, you likely do. You may not if you were fired for breaking a company policy or quit a job without good cause. You must also meet your state’s work and wage requirements.

Be sure to have a few pieces of information handy. You’ll need the addresses and dates of your former employment, and the reason you’re no longer employed.

You will also need some personal information such as your Social Security number or Alien Registration Number, date of birth, mailing address, phone number, email address, your driver’s license or state-issued ID, and proof of income. If you have dependents you may need their birth dates and Social Security numbers as well.

You may also be asked to create a username and login and answer several questions, including other sources of income. You should start receiving benefits within 3-6 weeks, depending on the state. Payments may be issued by direct deposit to your bank account or via a debit card.

This stuff is a LOT to keep up with, and to understand correctly. I could have prepared at least 3 tax returns during the time I researched and wrote this, but it is important for you to know all this as it happens.  Many of you have sent us information with which to prepare your returns. I'm a couple of days behind, but please bear with me. They will all get prepared carefully, in plenty of time.

AGAIN: Share this with your friends!

 We'd love to help them, and might even be able to handle their taxes on top of it all.

And I'll be in touch in the following weeks and days with many more details.

And again, I want to sent a shout out not only to Tina, who is working hard on many of your returns, but also to Erica, Darlene and Dianne, who are checking our work remotely, and making sure that information comes in and returns go out to you securely and smoothly!

We're here to serve, so let us know how we can help.


 
David is a registered representative at LifeMark Securities Corp.

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