CARES Act Relief for Individuals
Because millions have lost income due to the COVID-19 emergency, the CARES Act provides Americans with a $1,200 (or $2,400 for married taxpayers filing jointly) payment for taxpayers with adjusted gross incomes up to $75,000 (or $150,000 for married taxpayers filing jointly). For taxpayers who have children, they will receive an additional $500 per child. These payments are available for those with no income, those who are receiving up to $75,000, and those whose income comes from non-taxable means-tested programs like SSI.
For most taxpayers, they do not have to take any action to receive the payment. The Internal Revenue Service will use information from taxpayers' 2019 or 2018 tax returns to determine eligibility. For taxpayers whose income exceeds the $75,000 threshold, they will still be eligible for the payment, but their payment will be reduced by $5 for each $100 in income that exceeds the phase-out threshold. Those single filers with incomes exceeding $99,000, head of household filers with one child with incomes exceeding $146,500, and joint filers with no children with incomes exceeding $198,000 are not eligible for the payments.
Information on the program can be obtained from the following resource:
Link to IRS Stimulus information pagehttps://www.irs.gov/coronavirus/economic-impact-payments
Internal Revenue Service
The CARES Act expands unemployment benefits by increasing the amount of benefits paid, extending the number of weeks of jobless benefits that workers can receive, and making more workers eligible for benefits. Individuals who are self-employed, freelancers, gig workers, independent contractors, part-time workers, and those with limited work history are typically not eligible for unemployment benefits. But the CARES Act enables these workers to receive benefits if they are unable to work due to the COVID-19 emergency. Eligible employees will receive an extra $600 per week in unemployment benefits in addition to benefits they are entitled to under existing state programs. These supplemental payments will cover the next four months with an expiration date of July 31, 2020. For individuals who remain unemployed after exhausting their state unemployment benefits, the CARES Act provides benefits to eligible workers for an additional 13 weeks through the state programs.
Information from the Department of Labor can be obtained from the following resource:
Homeowners who have federally backed mortgage loans and are suffering financial hardship due to the COVID-19 emergency can request a forbearance of up 360 days. Federally backed mortgage loans means any loan that is secured by a first or subordinate lien on residential real property (including individual condominium and cooperative units) occupied by one to four families and is:
- insured by the Federal Housing Administration or the National Housing Act;
- guaranteed under the Housing and Community Development Act, the Department of Veterans Affairs, or the Department of Agriculture;
- made by the Department of Agriculture; or
- purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.
If borrowers affirm they are suffering a COVID-19-related hardship, the CARES Act requires servicers of federally-backed mortgages to grant forbearance for up to 180 days, which can be extended for an additional 180 days if the hardship continues. During the forbearance, no fees, penalties, or interest may accrue beyond the amounts scheduled or calculated as if the borrower made all contractually required payments on time and in full under the terms of the mortgage. If you are suffering a hardship due to COVID-19, contact your mortgage servicer to see if you are eligible.
Servicers of federally backed mortgage loans also are prohibited from initiating any judicial or non-judicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure-related eviction or foreclosure sale for at least 60 days beginning on March 18, 2020.
Information from the Consumer Financial Protection Bureau can be obtained from the following resource:
Link to Consumer Financial Protection Bureau CARES Act information pagehttps://www.consumerfinance.gov/coronavirus/ Consumer Financial Protection Bureau
Because consumers may work with lenders to defer loan payments or agree to other accommodations during the COVID-19 emergency, the CARES Act addresses concern about potential impact on consumers' credit reports in some circumstances. If a creditor agrees to defer payments, forbear on any delinquent account, or provide any other relief during the emergency, the creditor must report the account as current to the credit reporting agencies as long as the consumer makes required payments under the program. If the account was delinquent before the accommodation, the creditor must continue to report the account as delinquent during the program unless the consumer brings the account current during the program. In that case, the creditor must report the account as current.
The credit report protection applies from January 31, 2020 and will end on the later of 120 days after enactment of the CARES Act or 120 days after the date the national emergency declaration related to COVID-19 is lifted.
Information from the Consumer Financial Protection Bureau can be obtained from the following resource under "Protecting Your Credit":
Link to Consumer Financial Protection Bureau CARES Act information pagehttps://www.consumerfinance.gov/coronavirus/
Consumer Financial Protection Bureau
The CARES Act lifts early withdrawal penalties for COVID-19-related distributions from qualified retirement plans. A COVID-19-related distribution is one made by individuals who have tested positive for COVID-19, have a spouse or dependent diagnosed with COVID-19, or have experienced adverse financial consequences related to being quarantined, work closures, and other COVID-19-related circumstances. The 10% penalty for early withdrawals (i.e., before the participant reaches age 59 1/2) from tax-favored retirement plans is waived for COVID-19-related distributions in 2020 up to $100,000. If the distribution is taxable, the distribution can be included in income over three years beginning in 2020. Individuals may recontribute the amounts withdrawn to the retirement plan within three years without regard to that year's cap on contributions. The CARES Act includes other measures to provide flexibility for loans from qualified retirement plans. Required minimum distributions for individual account plans (but not defined benefit plans) are waived for 2020.
To encourage Americans to support charitable organizations, the CARES Act creates an above-the line deduction for charitable contributions up to $300, whether they itemize their deductions or not. Another provision suspends the 50% limit of adjusted gross income for cash contributions in calendar year 2020.