REALTOR Perspective - How does the CARES Act benefit me?

Apr 3, 2020 1:32:35 PM

On Thursday, April 2, 2020, Shawn Milletary, Eddie Berenbaum and Nick Pasquini - co-founders and owners of CENTURY 21 Redwood Realty invited Sean O'Connell CPA/PFS. CGMA and Partner at accounting firm PBMares, LLP to discuss how the newly passed Coronavirus Aid, Relief, and Economic Security (CARES) Act would affect real estate agents in the near term.

You can watch the full recording here, but please consult your own tax advisor before proceeding with any action. A number of clarifications were released from the Treasury Department after this webinar was filmed and more changes are surely around the bend. 

 

Among the questions answered in the discussion were:

What is the CARES Act exactly?

Coronavirus Aid, Relief, and Economic Security Act. A central tenet of the CARES Act is providing immediate relief to individuals struggling as a result of the coronavirus epidemic. Approximately 25% of the record-breaking $2.2 Trillion bill is directed to individuals to help them remain engaged in the economy.

We've heard the government is handing out checks - but do independent contractors (REALTORS) qualify? If so - are there limits or does one have to demonstrate hardship?

The great news is that the only qualifications are income limits because at this point the government is considering everyone to have a hardship. Many Americans will be receiving checks or direct deposits from the federal government in the coming weeks. The CARES Act approved “recovery rebates” for taxpayers equal to $1,200 for single filers, $2,400 for married filers, and $500 for each eligible child under 17 years old - unless your income is too high based on your tax return. If your income as a single filer was $75K, married filer $150K, or as head of household $112.5K or higher, your check will be  reduced in a phased fashion,  No demonstration of hardship is required for these checks.  If you haven't filed your 2019 IRS return, they will look at your 2018 return to determine your payment.

Do you have to pay tax on this money?

No, it is tax free!

Tell us about the Federal Tax Holiday included in this Act.

Your Federal individual or corporate tax return, normally due April 15, is not due until July 15, 2020. Payments due with your return will not accrue penalties or interest during this 90-day extension.  This includes first quarter 2020 estimated payments. Unlike the previous payment-only extension, there is no limit on the amount of payments that may be deferred from April 15 to July 15 without penalties or interest assessed. The  IRS will allow taxpayers to delay federal tax payments for 90 days after their due dates. This delay is both interest and penalty-free!

State taxes may have differing deadlines, so everyone should check with their respective states as to extension deadlines.

What opportunities are available to people who may see their revenue drop substantially in 2020?

Homeowners are allowed to suspend payments on federally backed mortgages for up to 180 days; this benefit can be extended for an additional 180 days, if required. Homeowners are required to contact their lender to request relief. No additional fees can be applied; however, regularly scheduled interest can accrue.

Additionally, a lender of a federally backed mortgage loan may not initiate a foreclosure or evict occupants for at least 60 days following March 18th, 2020.

Anyone with retirement accounts, including IRAs, can take early withdrawals of up to $100,000 from those accounts without having to pay the 10% early-withdrawal penalty.  Those who withdraw such funds can re-contribute them to the plan over three years or can keep the money and pay the tax on the withdrawals over a three-year period.

Additional Resources:

There was intense interest in this topic among local agents. CENTURY 21 Redwood Realty is committed to host follow up webinars to explore the changing financial landscape.

Have specific question about the CARES Act? Please leave a comment below!

Topics: CARES Act

Karen Berry

Written by Karen Berry

Karen Berry is CENTURY 21 Redwood Realty's Communications Manager. A long-time Northern Virginia resident, she has worked in marketing and communications for Fortune 500 companies, the federal government and the non-profit sector for over 20 years. A graduate of Mary Washington University with a bachelors of business administration and marketing, she is a passionate advocate for innovative technology and community social impact. Karen is pleased to represent C21 Redwood to both internal and external audiences.

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