(Tuesday, March 24, 2020, 7:30 p.m. EST) The stock market lost about a third of its value before rebounding 9.4% today on news that Congress was closer to an agreement on a $2 trillion economic stimulus package. The coronavirus crisis has reshaped the financial economic landscape and the situation is changing fast. Here are nine financial focal points for your immediate consideration. CARES Act. Coronavirus Aid, Relief and Economic Security (CARES) would include direct payments of $1,200 to many American adults and $500 to children. It would pay for $850 billion in loan and assistance for businesses, states and cities. It also allocates large spending increases for unemployment insurance, as well as for hospitals and health-care providers. Immediate Issues. Hunkered down across the country, practicing social distancing, you may not be at all ready yet to talk about the financial implications of the epidemic. However, if your family is in the throes of a medical crisis and has any tax or financial planning issues, please do not hesitate to contact our office. What’s Ahead. The pending CARES Act will, if enacted, allocate hundreds of billions of dollars to individuals as well as businesses. Once the new law is signed by the President, its impact on your personal situation will be clearer. There will be no shortage of questions about qualifying for tax relief in specific situations. Virus-Related. CARE waives the 10% early withdrawal penalty on retirement account distributions for taxpayers facing virus-related economic challenges. According to The Tax Foundation, withdrawals are taxable over three years, but you can recontribute for three years without affecting retirement account maximums. Business Owners. CARES allocates $350 billion for Small Business Interruption Loans, to help small businesses (fewer than 500 employees) make payroll and other expenses, according to The Tax Foundation, a non-partisan tax policy research group with a business-friendly reputation. "Notably, small businesses may take out loans up to $10 million and cover employees making up to $100,000 per year," according to the group. "Loans taken for this purposes are forgiven if the business does not lay off its employees (forgiveness is scaled down as layoffs rise)." •Employer Social Security payroll tax payments may be delayed until January 1, 2021.
•Companies with tax credit carryforwards and previous alternative minimum tax (AMT) liability can claim larger refundable tax credits than they otherwise could. Charity Encouraged. CARE creates a $300 above-the-line charitable deduction, even for filers taking the standard deduction and expands the limit on charitable contributions for itemizers. Education Loans. The Department of Education today announced that all borrowers with federal loans will have their interest rates automatically set at 0% for at least 60 days, giving borrowers with federal loans the option to suspend payments for at least two months without accruing interest. Team Up. Your family and your business are likely to be impacted financially by Covid-19 and now is a good time to plan how you can efficiently communicate with your team. While clients can depend on our firm as part of their team, your team might also include members of your family as well as other professionals. If you own a business, your team might include key employees responsible for operations or accounting. Ideally, you have a way to meet and collaborate online. Keep In Touch. The public health crisis is rapidly changing. So, too, is the financial, investment and tax planning situation. This update is a way for you to stay on top of the latest financial, tax and investment news. Please let us know the best way to keep in touch with you with updates.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial situation, or particular needs. Product suitability must be independently determined for each individual investor.
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
|