CARES Act Provisions for Individuals
On March 27th, the House of Representatives passed the CARES Act, a $2 trillion-dollar package meant to stimulate and protect the economy from the effects of the Coronavirus. This historic piece of legislation was just signed by the President and contains provisions for individuals, employers and small businesses. Below is a summary of the significant individual provisions:
- How much will I receive?
$1,200 per adult ($2,400 for married couples) and $500 for each child age 16 or under subject to certain income limitations. Single adults earning $75,000 or less and married adults earning $150,000 or less will get the full amount. Payments decrease for incomes above these levels.
- What if I haven’t filed my 2019 tax return?
The IRS will use your 2018 return.
- Do I have to apply to receive this payment?
No. Many payments will be direct deposited if you used this feature when you filed your return.
- When will I receive my payment?
Most people should receive payments within three weeks of the act becoming law.
Expanded Unemployment Benefits
- What is different about unemployment?
Anyone who is unemployed, partly unemployed or cannot work for a corona-virus related reason will likely receive benefits. The new bill even includes self-employed and part-time workers.
- How much will I receive?
It depends. Unemployment benefits typically replace 40-45% of your earnings. The Act provides a $600 supplement to state-paid unemployment. The maximum 26-week benefit period is extended by 13 additional weeks.
- How long will it take to start my benefits?
The one-week waiting period has been waived, but state offices have been inundated with claims.
- Can I take money out of my IRA or retirement plan early?
You can take up to $100,000 out this year without the 10% penalty if it is due to the Coronavirus. Income taxes on this withdrawal can be spread over three years, or you can put the money back within three years
- Can I borrow from my 401(k)?
You can. For the next 180 days, you can borrow up to $100,000 if you have been affected by the pandemic.
- My investments are down significantly. Do I have to take a required minimum distribution this year?
For 2020, you do not have to take a required minimum distribution
Other Individual Provisions
- Student loan payments on loans held by the federal government are suspended until September 30, 2020. Interest will not accrue during this period.
- Renters cannot be evicted for 120 days after passage of the act. Landlords cannot charge fees or penalties.
- Charitable contributions up to $300 will be deductible for any taxpayer, not just the itemizers.
- Wealthy individuals can deduct 100 percent of their cash charitable payments to public charities in 2020.
Please call on us if you have any questions about the CARES Act and its implications for you, your family or your co-workers.