Over the past few weeks there have been many reports, discussions, news hours, and more about the impact on personal finances the CoronaVirus has caused and continues to cause.
With its complexity, I thought it would be beneficial to have a single location to review the major parts of the CARES Act for the common person (SBA and PPP are not discussed).
Brief Summary of the Blog:
- The Cares Act Outlined at 30,000 feet
- What About That $1,200 check. . . . . .
- Payments Available To Be Postponed
- Who's Eligible For Unemployment?
- New Tax Deadline
- Penalty Free 401(k) / IRA Withdrawals
The Cares Act Outlined at 30,000 Feet
Outlined above is a simple visual of how the act is broken down.
Below is a bullet itemization of different aspects of the bill:
- TITLE II—Business Provisions
- TITLE II—Aviation Excise Taxes
What About That $1,200 check. . . . . .
The most talked about part of the act is the cash payment to millions of Americans. Below you will find outlined how much you can expect, how it will be paid, and when you can expect it, and how your payment is determined.
How will payments be distributed?
Most payments will be sent through direct deposit. If there is no direct deposit on file, your payment will be mailed.
When you can expect the stimulus check?
The estimation for payments beings distributed through direct deposit is late April.
If your payment has to be mailed, it could take up to 5 months for you to receive payment.
How is payment determined?
To get the payment you must have paid your taxes in 2018, 2019, or if you draw social security.
How much will the check be?
Taxpayers earning up to $75,000 a year will get $1,200 for each adult ($2,400 for married couples who file jointly and earn up to $150,000)
Plus $500 for each child under the age of 17
Income driven phase-out - if you earned $99,000 or more OR if a couple earned $198,000 or more (with no dependents), the payment drops to $0
Payments Available To Be Postponed
1. Federal Student Loan Payments
- Payment day forbearance (payment postponement) through the end of September
- 0% interest accrual for the period
**If you’re not sure if your loan qualifies, you can go to http://www.studentaid.gov to find out.
2. Mortgages
- If you have a federally- backed mortgage and you've lost income due to the outbreak, you can get a 60-day forbearance. A 30-day extension option is also available for up to 4 additional 30-day periods.
- YOU MUST CONTACT YOUR LENDER and explain your situation. Your lender cannot charge fees or penalties during this period.
3. Tenant Protection
- If you rent and your landlord has a federally-backed mortgage, you cannot be evicted for failing to pay rent for 120 days. Also, no fees/penalties can be assessed for nonpayment.
4. Auto Loans
- Similar to mortgage's, most major lenders have said they will suspend loan payments.
- To suspend your payments (if your lender will suspend them), you simply need to call your lender
Who's Eligible For Unemployment?
Almost Everyone!
New Tax Deadline
Due to the financial impact of the pandemic, the tax filing date got pushed back from April 15th to July 15th.
Those expecting to receive a refund are encouraged to still file by the original date so you can get your return sooner.
Penalty Free 401(k) / IRA Withdrawals
The CARES Act eliminates the usual 10% withdrawal penalty and gives people affected by the crisis access up to $100,000 of their retirement savings.
Also, the law doubles the amount of the 401(k) loan available to be taken from an account "...for the next 6 months to the lower of $100,000 or 100% of the balance. IRAs don't permit loans." - USA Today Article
**Make sure to contact your retirement provider if you have been affected by the virus to see how much you are eligible for.**
The dates, numbers, and information written in this article were written as of 4/7/2020 and may change moving forward.
There are also additional features of the act not discussed in this post. Please refer to the first listed source below for all features and explanations of the CARES Act.
***Disclaimer: I am not an attorney, CPA, investment adviser or any other professional who provides opinions/suggestions in this piece. PLEASE Contact your trusted Legal, Tax, and investment professional for more specific information. ***
Sources:
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