What Does National Stimulus Relief Mean for You?

On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a historic $2 trillion stimulus package designed to provide economic relief to Americans affected by the coronavirus pandemic, which by now includes every single person in the country, not to mention around the world.¹

While everyone has been impacted in some way by the presence of this virus, there are those who may not benefit from this legislative relief. We’re happy to help you work with your current household income and expenses to establish a financial strategy designed to give you confidence in your financial future. Please contact us to schedule a consultation.

The CARES Act is scheduled to pay out stimulus income for eligible Americans. The amount will be based on several factors, much of which is determined by your most recent tax return. If you’ve already submitted a 2019 return, that will be the basis of the payment; if not, the government will determine your benefit from your 2018 tax return. Note that the CARES Act has scheduled only one stimulus payment per person, although the debate over future payments continues in Congress.²

• The amount will be based on tax filing status and reported adjusted gross income (AGI):
  • Single filers with an AGI of $75K or less will receive $1,200; the amount will be reduced for those who earn more, phased out at $99K
  • Married joint filers with an AGI of $150K or less will receive $2,400; phased out at $198K
  • Heads of households with an AGI of $112.5K or less will receive $1,200

• Qualifying children under age 17 will receive $500 each

Anyone claimed as a dependent by another taxpayer will not receive any stimulus money. Unfortunately, this criteria means young adults age 16 and up who have not earned enough money to file their own tax return in the past two years will not receive a stimulus payout. Also, anyone who earned more than the thresholds on their last return but have since lost their job are not eligible for an immediate payout. They may, however, qualify for a rebate when filing their 2020 tax return.³

If you’ve previously provided the IRS your bank information for direct deposit, you don’t need to do anything to apply for the payout; payments are scheduled to be automatically deposited in late April.⁴

The CARES Act also enhanced unemployment insurance eligibility and payouts to include part-time and self-employed workers. The new legislation provides an extra $600 weekly payment, in addition to the weekly benefit amount eligible employees already receive under state law, and increases the maximum number of weeks individuals may receive benefits.⁵

The supplementary benefit is also available to people who were already receiving unemployment benefits. Qualified applicants include those who can’t work because of quarantine restrictions, whether voluntary or imposed. Note that employees who can work from home or are receiving employer-paid sick leave are not eligible for unemployment benefits.⁶

Federal student loan payments are automatically suspended for six months until September 2020 (private loans and FFEL loans excluded), although borrowers may continue making principal payments if they want. During this time, no interest will be charged on the loan balance.⁷

To give individuals the opportunity to recover from market losses, required minimum distributions from IRAs, 401(k)s, 403(b)s and other non-pension retirement plans are suspended for the whole of 2020.⁸

The new legislation established a charitable deduction of up to $300 for people who don’t itemize.⁹ The law also bans landlords who have a government-backed mortgage (e.g., Fannie Mae, Freddie Mac) from charging penalties or evicting tenants unable to pay rent during this period.¹⁰

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¹ Ashlyn Still, Heather Long and Kevin Uhrmacher. The Washington Post. March 27, 2020. “Calculate how much you’ll get from the $1,200 (or more) coronavirus checks.” https://www.washingtonpost.com/graphics/business/coronavirus-stimulus-check-calculator/. Accessed March 30, 2020.

² Ibid.

³ Ibid.

⁴ Ibid.

⁵ Evandro Gigante, et al. Proskauer. April 5, 2020. “CARES Act Expands Unemployment Insurance.”

https://www.lawandtheworkplace.com/2020/04/cares-act-expands-unemployment-insurance-benefits/. Accessed April 9, 2020.

⁶ Kevin Drum. Mother Jones. March 30, 2020. “Here’s a Quick Primer on the New, Expanded Unemployment Benefits.” https://www.motherjones.com/kevin-drum/2020/03/heres-a-quick-primer-on-the-new-expanded-unemployment-benefits/. Accessed March 30, 2020.

⁷ Zack Friedman. Forbes. March 28, 2020. “Federal Student Loan Payments Will Be Suspended Through September 30.” https://www.forbes.com/sites/zackfriedman/2020/03/28/student-loans-payments-suspended/#1c1958881b10. Accessed March 30, 2020.

⁸ Nelson Mullins Riley & Scarborough LLP. March 30, 2020. “CARES ACT– Impact on Tax-Qualified Retirement Plans.” https://www.jdsupra.com/legalnews/cares-act-impact-on-tax-qualified-36905/. Accessed March 30, 2020.

⁹ Leslie Albrecht. Marketwatch. March 30, 2020. “The $2 trillion coronavirus stimulus bill encourages Americans to donate to charity.” https://www.marketwatch.com/story/the-2-trillion-coronavirus-stimulus-bill-encourages-americans-to-donate-to-charity-2020-03-30. Accessed March 30, 2020.

¹⁰ National Housing Law Project. March 28, 2020. “Summary and Analysis of Federal CARES Act Eviction Moratorium.” https://www.nhlp.org/wp-content/uploads/2020.03.27-NHLP-CARES-Act-Eviction-Moratorium-Summary.pdf. Accessed March 30, 2020.