Government

What to Know about the U.S. $2.3 Trillion

Coronavirus Stimulus Package

The Coronavirus Aid, Relief and Economic Securities (CARES) Act is a $2 trillion economic stimulus package that was signed into law by President Trump on March 27, 2020. It’s purpose is to provide relief to Americans and small businesses experiencing financial hardship due to the COVID-19 pandemic. The bill includes a variety of benefits, from direct stimulus checks to Americans and expansion of unemployment benefits, to a suspension of federal student loans until September 30th and rules for retirement accounts. In this article, we highlight seven important things you should know about how the stimulus package will affect you and how to claim your benefits.

Stimulus Payments for

Individuals and Married Couples The federal government is sending direct cash in the form of stimulus payments to Americans in need of financial relief from the coronavirus crisis. the new $2 trillion stimulus package, which will provide $1,200 for individuals and $2,400 for married couples, with an additional $500 per child under the age of 17.

These payouts will be income-based and single adults with an adjusted gross income of $75,000 or less will receive the full amount. For married couples with no children earning $150,000 or less in combined incomes will also receive the full amount. The payment decreases for single people earning at least $99,000 and married couples with no children earning at least $198,000.

Your income will be based on either your 2018 or 2019 federal tax filings, depending on whichever the IRS has received recently. Therefore, if you have not filed your 2019 taxes yet, the IRS will go by your 2018 return. People who do not have Social Security Numbers are not eligible for the payments, so this excludes some people with visas and undocumented immigrants.

Keep in mind that only people with valid Social Security Numbers will receive payments, with the exception of people in the military. Those who receive Social Security payments, disability payments and unemployment are still eligible. Also, this process is automatic and you will not have to apply or opt in to receive your payment.

Expansion of Unemployment Benefits

The stimulus package extends eligibility for unemployment claims for the following situations:

• Workers who have been laid off or furloughed “through no fault of their own.” • Workers experiencing reduced hours because of COVID-19. • Workers who have quit, but only under some extenuating circumstances (e.g, unsafe workplace).

Part-time workers, gig workers, self-employed workers, independent contractors, freelancers. People who have been diagnosed with COVID-19 or who are taking care of family members who have it themselves. People who have been ordered to self-quarantine. People whose child’s day care or school has been shut down.

Those who are not eligible to apply for unemployment include individuals whose jobs have been shifted to work-from-home, and people who are receiving paid sick leave or paid family leave; those who have just entered the workforce and can’t find jobs right now; and people who proactively quit their jobs because of fear of COVID-19.

The new benefit increases will vary state, but the federal government will give additional $600 per week to whatever a person receives from their state for up to four months only. How long will your unemployment benefits last? Well, each state has varying maximums for unemployment, ranging from 12 to 28 weeks, but most states are allowing for 26 weeks. In addition, the new bill adds 13 more weeks of federally funded unemployment insurance if you reach the state maximum.

Financial Relief for Small

Businesses Impacted by COVID-19 The CARES Act provides $376 billion in relief for American workers and small businesses.Of these funds, the recent CARES Act will also grant the SBA to give out a total of $349 billion for guaranteed loans through its loan programs. At time of writing, the SBA has run out of these funds within two weeks of providing financial aid to small businesses, and the federal government is working on funneling more money to the SBA to carry on their funding programs.

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Financial Relief for Independent Contractors/Self-Employed Previously, self-employed people and independent contractors have not been eligible to collect unemployment except if their business is an S-corp. However, since the government has recently passed the CARES Act, a $2 trillion stimulus package, unemployment insurance has been extended to self-employed workers and independent contractors.

Those who qualify will be able to collect unemployment benefits for 13 more weeks than the usually allotted time and receive an additional $600 a week on top of state unemployment benefits for up to four months. Note that the rate of state pay might be lower for self-employed, freelance workers and independent contractors in your state. To apply, visit your state’s unemployment website and be ready to provide your Social Security number (and those of your dependents), and driver’s license or state ID.

With the developing changes, you might also be eligible for the SBA’s Economic Injury Disaster Loans for qualifying small businesses. As mentioned above, these are low-interest loans with terms that might last as long as 30 years for small businesses and nonprofits.The CARES Act also established several new temporary SBA programs to address the

COVID-19 outbreak: SBA Economic Injury Disaster (EIDL) Loans & PPP (Paycheck Protection Program).

EIDL Loans Offer $10K Advance Small business owners in all U.S. states, Washington D.C., and territories impacted by the COVID-19 pandemic are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. As stated on the SBA’s website, “This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.” Please note that “successful application” does not mean you have to be approved for the loan. Moreover, loan approval is not necessary to receive the loan advance.

This program is for any small business with less than 500 employees (which includes sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19. In certain industries, businesses may have more than 500 employees if they meet the SBA’s size standards for

respective industries. The U.S. Small Business Administration has updated their application for Economic Injury Disaster Loans. Interested businesses as well as previous applicants are being asked to apply or reapply here. On the application, make sure to check the $10,000 box to access the emergency grant.

Student Loan Payment Suspension Federal student loan payments, as well as interest, have been automatically suspended until September 30, 2020. This means that people with student loans do not have to make payments towards their debt, and they will not accrue new interest from now until the end of September.

Individuals can still make monthly payments if they wish, but it is not required. Since interest is suspended, the payment will go toward previously accrued interest and then the principal. Eligible loans include Direct Loans from the federal government from the past decade. However, state loans, private loans, Perkins loans and the majority of Federal Family Education Loans (including Sallie Mae student loans) are not eligible.

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Retirement Account

Required Minimum Distribution As part of the stimulus package, the government has suspended required minimum distributions (RMDs) on all retirement accounts for the rest of the year 2020. The intention of this change is to prevent retirees from having to dip into their retirement accounts while the market is down, which gives accounts more time to rebound in the future. If your employer is helping pay off some of your student loan debt, from March 27th to the end of 2020, employers can offer up to $5,250 in additional student loan assistance and tuition reimbursement without counting it toward your income.

Make sure to take advantage of the financial assistance at your disposal if you are in need, and keep well-informed as changes are made regarding the stimulus package. During these times, updates are happening every day as the federal government tries to accommodate varying circumstances and overcomes obstacles to make sure Americans are receiving the help they need during this time of economic hardship.

For those who have already taken an RMD, you have 60 days to return the money to the account or open a new qualified retirement account and avoid a penalty. Otherwise, you’ll be liable for any tax on the withdrawal.

You can also withdraw money from your retirement account early now that the 10 percent bonus penalty on withdrawals has been waived for 401(k)s and IRAs. However, there are limitations: the distributions must occur in 2020 and must be no more than $100,000 in total.

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