As most of us know, President Trump on Friday signed into law the CARES Act (The ‘‘Coronavirus Aid, Relief, and Economic Security Act’’). New Jersey will get an estimated $3.4 billion from a “state stabilization fund” and more to deal with the health and economic impact of the coronavirus.
There is a lot of information stuffed into this law. For those who need to dig into the weeds on this legislation, I am providing the CARES Act in its entirety.
Below is a summary of the sections of the Act that most impact New Jersey small businesses and workers.
SMALL BUSINESS RELIEF
- SBA EMERGENCY GRANTS: Up to $10,000 is available for small businesses through the Economic Injury Disaster Loan Program.
- PAYROLL TAX RELIEF: The measure allows employers to delay the payment of their portion of 2020 payroll taxes until 2021 and 2022.
- WORKER RETENTION TAX CREDIT: Businesses and nonprofits who suspended or partially suspended operations can receive a refundable payroll tax credit for part of the wages paid to eligible employees. An article from Manatt Tax explains in more detail this tax credit.
- CASH FLOW ASSISTANCE/LOAN FORGIVENESS: For companies with less than 500 employees who maintain payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven. If interested, contact your bank. I would suggest you first read this article from Forbes magazine regarding this Paycheck Protection Program.
- RELIEF FOR NET OPERATING LOSSES: The Tax Cuts and Jobs Act (TCJA) net operating loss rules are modified. The 80% rule is lifted, and losses can now be carried back five years.
- EXCESS LOSS LIMITATIONS: The excess loss limitation (ELL) rules for pass-through entities are suspended.
- INTEREST EXPENSE LIMITATIONS: The interest expense limitations are increased to 50% from 30% for tax years beginning in 2019 or 2020. Taxpayers can also elect to calculate the interest limitation for 2020 using their 2019 adjusted taxable income as the relevant base, which often will be significantly higher.
- RELIEF FOR MANUFACTURERS: The New Jersey Manufacturing Extension Program offers $1.25 million for small- and medium-sized manufacturers.
RELIEF FOR INDIVIDUALS, INCLUDING INDEPENDENT CONTRACTORS AND GIG WORKERS
- STIMULUS CHECKS: Americans who pay taxes will receive a one-time direct deposit of up to $1,200, and married couples will receive $2,400, plus an additional $500 per child. The payments will be available for incomes up to $75,000 for individuals and $150,000 for married couples. The government will use adjusted gross income from 2019 tax returns to determine eligibility. If 2019 returns have not yet been filed, 2018 tax returns will be used. The checks will be sent in the same method you received your IRS refund. If you are not set up for direct deposit, your check will be mailed using the address on your most recent tax return. If your income exceeds the thresholds, the amount will be reduced on a sliding scale and phased out at $99,000 for single filers, $198,000 for joint filers, and $136,500 for head of household filers. The IRS and the Department of Treasury have not yet announced how much taxpayers married filing separately will receive. An article from Forbes magazine, explains the stimulus checks in more detail and also provides a calculator to see how much money you may be eligible to receive.
- UNEMPLOYMENT INSURANCE FOR THOSE TYPICALLY ELIGIBLE: Workers who were laid off, placed on an unpaid furlough or who otherwise have had their normal work schedule reduced by 20% or more may be eligible for unemployment insurance and should file a claim immediately on the NJ.gov site. Those eligible will receive up to an additional $600 per week on top of what New Jersey would have allotted through July.
- UNEMPLOYMENT FOR GIG WORKERS, CONTRACTORS AND OTHERS : The CARES Act includes special protections for those who would not otherwise be eligible for unemployment insurance and benefits, including the self-employed, independent contractors, gig workers, part-time employment seekers, those who lack sufficient work history, or those who have exhausted their unemployment benefits under existing schemes. They will need however to self-certify that they are unemployed, partially unemployed, or unable or unavailable to work because of the coronavirus outbreak. The Temporary Pandemic Unemployment Assistance program will run through the end of this year and those in New Jersey should apply directly online for unemployment insurance benefits.
Should you need any assistance in maneuvering through all of this, Marzano Human Resources Consulting.