The Coronavirus Aid Relief & Economic Security Act (4/2/2020)
As we are all experiencing a surreal time in our lives, positive measures are being taken to help the situation. Last week, the largest economic stimulus package in American history – the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was passed. CARES Act is designed to help individual taxpayers, business owners and the entire economy try to revive itself from the downturn caused by the COVID-19 pandemic and the closures, layoffs and economic stress that has followed.
Here are some of the highlights as we understand them:
A one-time, non-taxable payment to everyone who makes under $75,000 if you’re single, $112,500 if you’re head of household and $150,000 if you’re married. Taxpayers who are single or head of household will get $1,200 of relief. Taxpayers who are married will get $2,400 of relief. For each child you have who is 16 years old or younger, you will get an additional $500 in your stimulus check. If you already filed your 2019 taxes and provided direct deposit information for a refund, it will be deposited that way.
Most mortgages are prohibited from foreclosure actions for 60 days starting March 18th for borrowers who request it and can demonstrate a COVID-19 related hardship. Landlords are subject to a 120-day moratorium on filing eviction proceedings for the non-payment of rent; unpaid rent will still accrue, but landlords may not charge fees or assess fines.
Through July 31, the federal government will provide a temporary Federal Pandemic Unemployment Compensation (FPUC) of $600 a week for any worker eligible for state or federal unemployment compensation benefits. THE FPUC will be paid in addition to, and at the same time as, regular state or federal unemployment benefits.
Payment Protection Program (PPP) Loans will provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans will be forgiven. Small businesses and other eligible entities will be able to apply if they experience COVID-19 hardship between February 15 and June 30, 2020.
Required Minimum Distributions (RMDs) are suspended for 2020. If you are currently taking your RMD and do not need it or would like to decrease the amount, please contact us.
Penalty-free distributions can be taken from retirement plans for Coronavirus-related issues and expenses due to financial hardship and other qualifying reasons. Withdrawals up to $100,000 made on or after January 1st would not incur the penalty. To ease the tax burden, if you pull money from your retirement account, you have up to three years to pay taxes on the withdrawals.
Other parts of the comprehensive bill include:
- $150 billion for local governments for expenditures incurred due to the public health emergency
- $8.8 billion in additional funding for Child Nutrition Programs in order to ensure children receive meals while school is not in session
- $450 million in assistance for banks so they can continue to assist those Americans in need
- $30.75 billion for an Education Stabilization Fund for states, school districts and institutions of higher education for costs related to coronavirus
- $4.3 billion to support federal, state, and local public health agencies to prevent, prepare for, and respond to the coronavirus
- $2 billion in direct allocation to state and local Community Development Block Grants that must be allocated within 30 days of enactment of the bill
There is still much more to be understood and implemented with the CARES Act, but we are encouraged by the potential relief. This is a difficult time for most and it is important to focus on the positive and what you can control. Secure Planning is here for you and will continue to be available to answer questions and concerns.
Lisa A. Dugan
Posted: April 2, 2020