[US] CARES Act Will Bring Financial Relief

24 APR 2020

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law. Among the essential support the act provides are unemployment insurance, rent and mortgage payment relief, emergency financial assistance, penalty-free IRA and 401(k) early withdrawals, and funds for food banks and other food security programs, Air Education and Training Command breaks down the benefits the CARES Act will bring to Americans struggling during this pandemic.

“The CARES Act, the biggest rescue package in U.S. history, seeks to provide emergency financial assistance to people and businesses as the coronavirus pandemic continues,” Stephen Parchman - community readiness specialist at the Joint Base San Antonio-Lackland Military and Family Readiness Center - said, “It is meant to relieve financial pressures on Americans.”

Emergency Financial Assistance

The government is sending $1,200 to each qualified person - or $2,400 to qualified married couples - as part of the Act, Parchman said.  

In most cases to qualify for this amount, people must have an individual adjusted gross income, (AGI) of under $75,000, rising to $112,500 for heads of household and $150,000 for joint filers. Single filers earning up to $99,000 and joint filers who earn up to $198,000 should qualify for reduced amounts. 

People earning above the thresholds will have their payment reduced by $5 for every $100 of income over the limit. Eligible families with children will also receive $500 for each child under the age of 17. 

“In order to determine your AGI, the government will use your 2019 tax return, or your 2018 tax returns if you have yet to file 2019 returns,” Parchman said. “Retirees who receive Social Security benefits are also eligible to receive a check, as are people who receive the Earned Income Tax Credit. Stimulus deposits are expected to be dispersed in mid-April, and recipients should receive a letter in the mail 15 days prior to receiving the payment.”

Advice on budgeting and financial planning for emergency financial assistance can be found here. (Link via original reporting)

Unemployment Insurance Program

Families coping with loss of employment during the COVID-19 crisis may benefit from unemployment provisions in the CARES Act.  

The Texas Workforce Commission - together with the Department of Labor - is implementing the requirements of the CARES Act and continuing to process unemployment insurance claims caused by the COVID-19.

Some people who have used up their unemployment benefits may be able to extend their benefits.  

“If you recently exhausted benefits, no action is needed from you. The TWC will determine if you qualify and notify you by mail or electronic correspondence of your eligibility,” the commission website says. 

People who are self-employed, contract workers or those who previously worked in a position that did not report wages may also qualify for unemployment. 

“If you applied for unemployment benefits, but lacked the necessary wages to qualify, no action is needed. We will determine if you qualify under the new stimulus bill and notify you by mail or electronic correspondence of your eligibility,” the TWC says. 

Penalty-Free IRA and 401(k) Early Withdrawals

Individuals diagnosed with COVID-19, those whose spouses have tested positive, or anyone who has experienced the adverse financial impact of the novel coronavirus may withdraw up to $100,000 from their tax-advantaged retirement accounts - their 401(k) or IRA - penalty-free, under the CARES Act. 

Early withdrawals would usually come with a 10 per cent surtax, as well as normal income taxes, Parchman said. 

“A distribution under the provisions of the act will be counted as income, meaning you will have to pay taxes on it spread out over three years,” he explained. “Also, people who take the distribution will have a three-year window to repay the money if they wish.”

The provision for penalty-free early withdrawals does not cover pension plans.

Food Banks and Other Food Security Programs

“To help hungry Americans, the CARES Act authorizes $450 million to go to food banks and other food programs, which is in addition to previous emergency funding,” Parchman said. 

Furthermore, $8.8 billion will go to school meal programs, as well as $15.5 billion to the Supplemental Nutrition Assistance Program, he continued. 

“For families that have been impacted by the pandemic, we strongly suggest they utilize the available resources to include food pantries, schools and the organizations.”