What is Coronavirus Tax Relief?

In response to the economic hardships caused by the COVID-19 pandemic, the United States government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. This legislation included several tax relief provisions designed to provide financial assistance to individuals, families, and businesses.

Key Provisions of the CARES Act

Economic Impact Payments: The CARES Act authorized the distribution of one-time Economic Impact Payments (EIPs) to eligible individuals and families. The payments were intended to provide immediate financial relief to those who were experiencing economic hardship due to the pandemic.

Recovery Rebate Credit: For those who did not receive an EIP or received less than the full amount, the CARES Act created the Recovery Rebate Credit. This credit can be claimed on the 2020 tax return to receive the full amount of the EIP.

Advance Child Tax Credit Payments: The CARES Act expanded the Child Tax Credit (CTC) and allowed for advance payments of the credit to be made in 2021. These payments were intended to provide monthly financial assistance to families with children.

Tax Treatment of Unemployment Benefits: The CARES Act made unemployment benefits received in 2020 tax-free up to $10,200. This provision was intended to provide financial relief to those who lost their jobs due to the pandemic.

Employee Retention Credit: The CARES Act created the Employee Retention Credit (ERC) to encourage businesses to retain employees during the pandemic. The ERC is a refundable tax credit for businesses that paid qualified wages to employees.

Paid Sick and Family Leave Credits: The CARES Act created two new tax credits for businesses that provided paid sick and family leave to employees due to the pandemic. These credits are intended to help businesses cover the costs of providing paid leave.

Eligibility for Coronavirus Tax Relief

Eligibility for the various coronavirus tax relief provisions varies depending on the specific provision. In general, individuals, families, and businesses that meet certain income and other requirements may be eligible for assistance.

How to Claim Coronavirus Tax Relief

The specific steps for claiming coronavirus tax relief vary depending on the provision. In general, individuals and families can claim the EIP, Recovery Rebate Credit, and advance CTC payments on their tax returns. Businesses can claim the ERC and paid sick and family leave credits on their quarterly employment tax returns.

Additional Resources

For more information on coronavirus tax relief, please visit the following resources:

• IRS Coronavirus Tax Relief Page
• CARES Act Tax Relief Provisions
• COVID-19 Economic Impact Payments
• Recovery Rebate Credit
• Advance Child Tax Credit Payments
• Tax Treatment of Unemployment Benefits
• Employee Retention Credit
• Paid Sick and Family Leave Credits