The CARES Act was signed by President Trump and put into law about 24 hours ago.  As I read through this 880 page document, here are some of my initial interpretations.  I will Blog more in the coming days about this as I field more questions and comments from clients, friends and colleagues. - Montgomery Dillavou CPA

Direct payments: Americans will receive a one-time direct deposit of up to $1,200, and married couples will get $2,400, plus an additional $500 per qualifying child. The payments will be available for incomes up to $75,000 for individuals, $112,500 for heads of household and $150,000 for married couples. This is true even for those who have no income, rely on Social Security benefits, or whose income comes entirely from non-taxable, means-tested benefit programs.  

Phaseouts apply: for every $100 of income above those thresholds, your check will drop by $5. So, if you are a single filer earning $75,100, your check will be $1,155 ($1,200-$5). If you are a single filer earning $85,000, your check will be $700 ($1,200-$500). If you do the quick math on that, it means that you'll phaseout completely (meaning that you'll get nothing) once you hit $99,000 as a single filer, $198,000 as a married couple filing jointly, or $146,500 for heads of household.

What is a qualifying child ?  Relationship - Your son, daughter, adopted child, stepchild, foster child or a descendent of any of them, such as your grandchild.  Brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them, such as a niece or a nephew. Age At the end of the filing year, your child was younger than you (or your spouse if filing a joint return) and younger than 19.

At the end of the filing year, your child was younger than you (or your spouse if filing a joint return), younger than 24, and a full-time student. At the end of the filing year, your child was any age and permanently and totally disabled3

Residency  The child must have the same main home as you (or your spouse if filing a joint return) in the United States4 for more than half of the tax year

Technically, the checks are advances of refundable credits. Treasury will advance your check based on your most recently filed tax return (2018 or 2019 tax return). If you haven’t filed a tax return, the bill allows the Treasury to use the information on your 2019 Form SSA-1099, Social Security Benefit Statement, Form RRB-1099, Social Security Equivalent Benefit Statement.

Will I still get the check if I owe the IRS some money? Yes. If your refund would normally be seized to pay a tax debt, that shouldn’t happen here. Shouldn’t. Assuming it works as planned.

How will the amount be distributed ?  Electronically if you had your most recent federal tax refund or balance due deposited or withdrawn from your bank account.  If your refund was mailed to you or you mailed in your balance due then the check will be mailed to you. This is expected to take an extra 3 - 5 weeks.  

Use of retirement funds: The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan. 1. Older Americans who are subject to mandatory minimum distributions from their retirement accounts would be able to keep their capital invested instead of being forced to cash out to draw on that capital without penalty, which is suspended for 2020

Small businesses: Companies with 500 employees or fewer that maintain their payroll during coronavirus can receive up to 8 weeks of cash-flow assistance. If employers maintain payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.

The unemployed: The program's $250 billion extended unemployment insurance program — "unemployment on steroids,"  expands eligibility and offers workers an additional $600 per week for four months, on top of what state programs pay. It also extends UI benefits through Dec. 31 for eligible workers. The deal applies to the self-employed, independent contractors and gig economy workers.  Employer state unemployment rates will not be adjusted upward for employee claims for the remainder of 2020.

Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.

Restores Support for Businesses Suffering Losses: The bill also allows businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds.

Delays Payroll Tax Payments for Employers: Employers would be able to delay the payment of their 2020 payroll taxes until 2021 and 2022.