The CARES Act Stimulus Check and
Unemployment Benefits
The COVID-19 pandemic has led to one of the most significant economic crises in recent times. Many people have lost their jobs, businesses have closed down, while others are struggling to keep up with the expenses due to an economic downturn.
To help ease the financial burden of Americans, the federal government introduced the CARES Act, a coronavirus relief package. This package includes stimulus checks and expanded unemployment benefits.
Stimulus Checks
The stimulus check, also known as the Economic Impact Payment or rebate payment, is a one-time payment to eligible individuals, couples, and eligible children. The purpose of this payment is to help people meet their financial needs during this unprecedented time.
The stimulus check is worth up to $1,200 for individuals, $2,400 for married couples filing jointly, and $500 for each qualifying child. Qualifications and details about stimulus check distribution are as follows:
Income: To qualify for the stimulus check, an individual must have an adjusted gross income (AGI) of less than $75,000, and couples filing jointly must have an AGI of less than $150,000.
Above this threshold, the payment amount starts to decrease gradually. Individuals with an AGI of $99,000, and couples with an AGI of $198,000, or more will not receive any stimulus checks.
Dependent: Only eligible children under the age of 17 qualify for the $500 stimulus payment. Adult dependents, such as college students or elderly parents, do not qualify for the payment.
Direct Deposit: For people who have filed their tax returns in 2018 or 2019, the stimulus payment will be directly deposited into their bank account. For those who have yet to file their tax returns, they can still receive the stimulus payment by using the IRS’ “Non-Filers” tool.
Paper Checks: Some individuals may receive paper checks in the mail if they do not have a bank account number on file with the IRS. Paper checks will take longer to receive than direct deposit, so it is important to keep an eye out for mail if you are waiting for your stimulus payment.
Social Security And Disability Benefits: People receiving Social Security or disability benefits are also eligible for the stimulus check, even if they do not file tax returns.
Unemployment Benefits
The CARES Act includes significant changes made to unemployment benefits, which can be of great help to those who lost their jobs due to the pandemic. The following programs are available under the CARES act:
Expanded benefits – Americans who qualify for unemployment insurance can receive an additional $600 per week, on top of their regular benefits, for up to four months.
This increase in benefits is aimed at helping those who have difficulty making ends meet due to job loss. This program is scheduled to end on July 31st, 2020.
Availability – The CARES Act also expands the number of weeks people can receive benefits. Under normal circumstances, states offer between 12 and 28 weeks of unemployment benefits.
However, with the CARES Act, people can receive up to 39 weeks of unemployment benefits. Time frame – The federal government has authorized states to waive the waiting week, meaning people can start receiving unemployment benefits as soon as they file a claim.
Eligibility for gig workers, freelancers, and independent contractors – Under normal circumstances, gig workers, freelancers, and independent contractors aren’t eligible for unemployment benefits. However, with the CARES Act, these workers can qualify for unemployment benefits, if they meet specific criteria such as health, economic consequences, and COVID-19 qualifying reasons.
Conclusion
We are living through challenging times that have adversely affected the economy. However, the CARES Act stimulus payments and expanded unemployment benefits help to ease the economic burden for individuals and their families.
Thanks to these programs, many will be able to keep up with bills, stay in their homes, and put food on the table until we come through this pandemic crisis.
CARES Act Retirement Funds
The COVID-19 pandemic has caused significant economic disruption, and many people have been affected in multiple ways. To help Americans combat the financial crisis arising from the pandemic, the federal government introduced the CARES Act, which offers multiple economic relief provisions.
Two of its most significant provisions related to retirement funds and housing are, respectively, withdrawals from retirement accounts and mortgage forbearance.
Withdrawals from Retirement Accounts
The CARES Act has provided economic relief to Americans struggling during the pandemic by allowing penalty-free and tax-deferred withdrawals from their retirement accounts. Usually, if someone withdraws funds from a tax-deferred retirement account before the age of 59.5, a 10% penalty applies.
But the CARES Act has waived this penalty for Coronavirus-Related Distributions.”
The CARES Act defines Coronavirus-Related Distributions as withdrawals from a retirement plan taken between January 1st, 2020, and December 31st, 2020, that are directly or indirectly related to the COVID-19 pandemic. This could include illness, unemployment, or a reduction in work hours.
The distribution of these funds can be spread over three years, and recipients can also optionally make the distributions tax-deferred, thus spreading the financial burden over several years. If someone takes a Coronavirus-Related Distribution, they can pay taxes on the withdrawal at any time within the three-year-period or can choose to return the distribution to their retirement plan before the three-year-period ends, which means they will receive a refund for any taxes they paid.
Increased Borrowing from 401(k)s
Under normal circumstances, an individual can withdraw a maximum of 50% of their 401(k) balance, or $50,000, whichever amount is less. However, the CARES Act has increased a participant’s ability to borrow or withdrawal money from their retirement accounts up to $100,000, or 100% of the vested amount, whichever is less.
This change is one of the most significant provisions the CARES Act offers and can be of great help to those struggling during the pandemic. However, it is essential to remember that these withdrawals are still loans, and the participant is obligated to pay a certain amount back to the retirement account.
Participants have a period of six years to repay these loans fully.
CARES Act Housing
The COVID-19 pandemic has impacted housing throughout the United States, with many people struggling to pay rent or manage mortgage payments. To help alleviate the housing crisis, the CARES act has provisions in place to help renters and homeowners.
Moratorium on Evictions
One of the provisions under the CARES Act is an eviction moratorium covering 120 days. The moratorium covers renters living in covered dwellings that use federal housing funds or have federally guaranteed mortgages.
It is important to note that this moratorium is only valid for those who affirm that the COVID-19 pandemic has affected their ability to pay their rent.
The federal government can extend the moratorium on evictions for up to an additional 120 days if needed.
Mortgage Forbearance
Borrowers who have government-guaranteed mortgages have the option of requesting forbearance under the CARES Act. Forbearance is a temporary pause or reduction of mortgage payments.
Borrowers who have been impacted by COVID-19 and have experienced hardship in making mortgage payments may request forbearance for up to 180 days, which may be extended for an additional 180 days. In total, forbearance can be extended for up to 360 days, which is equivalent to 12 months.
It is important to note that during forbearance, interest will continue to accrue on the outstanding balance of the loan, which will lead to an increase in the total cost of borrowing after the forbearance period comes to an end.
Conclusion
The CARES Act has provisions to help economically-affected Americans stay afloat. This aid can be received through multiple channels, including withdrawals from retirement accounts, increased borrowing from 401(K)s, eviction moratorium, and mortgage forbearance.
During this difficult time, the federal government has taken steps to help Americans take control of their financial health and subsequently, help them secure their future.
CARES Act Student Loan Debt
The COVID-19 pandemic has brought about widespread economic difficulties, with millions of Americans facing job loss, pay cuts, and economic uncertainty. To help alleviate this stress, the CARES Act has placed provisions to help student loan debt holders.
Two of the most significant relief provisions related to student loans are the suspension of federal student loans and private student loan options.
Suspension of Federal Student Loan Payments
The CARES Act has granted relief to borrowers with federal student loans, suspending payments on most federal student loans until September 30th, 2020. The suspension of payments includes Direct Loans, Perkins Loans, and Federal Family Education Loans.
This provision means that borrowers can stop making payments without penalty or interest charges accruing on their loan, and the months of non-payment still count towards any income-driven repayment plan. Additionally, during this suspension period, all collection activities on these loans will be halted, and these months of non-payment won’t impact borrowers’ credit score.
Borrowers can use this suspension to save money during these financially-uncertain times.
Private Student Loan Options
Private student loans are loans from private lenders, and these loans are not eligible for the federal student loan relief listed above. However, many private lenders are offering relief options for those impacted by COVID-19.
Some private lenders have announced hardship programs that may offer payment reductions, interest-only payment options, and temporary forbearance. Some lenders may allow refinancing of existing loans to lower interest rates, but requirements vary among lenders, and borrowers should consult with the lender for more information.
It is important to note that eligibility for these payment options varies among lenders. Borrowers should reach out to their lenders to discuss whether they qualify for assistance, and what relief options may be available to them.
CARES Act and Credit Score
During times of significant uncertainty, credit scores can be affected in numerous ways, and CARES Act tries to prevent that by providing relief to borrowers. Two of the most crucial provisions related to credit scores and the CARES Act are forbearance and deferment’s impact on credit scores and paying credit cards and bills.
Forbearance and Deferment Impact on Credit Score
Forbearance and deferment are options offered during times of hardship for those who struggle with loan payments. They allow borrowers to pause payments or temporarily reduce payment amounts.
Although they can help ease the financial burden, they can similarly impact a borrowers credit score. It’s important for borrowers to speak with their lenders to find out the details of the forbearance and deferment policy’s impact on credit scores.
Normally, when a borrower goes into forbearance or deferment, their loan is considered standard and is treated as current, meaning it will not count as delinquent or appear on a borrower’s credit report.
However, the duration of forbearance or deferment is the most critical impact on credit scores.
If borrowers cannot pay off their loans after the forbearance or deferment period is up, they may lose the benefit of having had their loan in a “current status.”
Paying Credit Cards and Bills
The pandemic has created uncertainty, and many borrowers have found it difficult to pay their credit cards and bills on time. With bills, one can consider reaching out and making arrangements with lenders.
Many lenders are offering hardship programs for those affected by COVID-19. Communication is the key to the best possible outcome.
Policies related to credit bureaus are also changing. Credit card companies and lenders have started to work with borrowers proactively to find solutions during these challenging times.
They have waived late fees and extended grace periods to account for pandemic-related disruption. Although there are third-party scams, its always best to contact a lender rather than fall prey to a scammer who may only exacerbate your financial situation.
Conclusion
The COVID-19 pandemic has created major economic challenges, and the CARES Act is here to help those who may be struggling. The suspension of federal student loan payments and private student loan options provide financial relief for those impacted by the pandemic.
Meanwhile, care must be taken to understand the impact of moves related to forbearance and deferment when it comes to credit scores. Communication is the key to the best possible outcome.
CARES Act for Small Businesses
The COVID-19 pandemic has brought about significant economic challenges that have hit small businesses hard. To combat these challenges, the U.S. government has introduced economic relief provisions in the form of the CARES Act for small businesses.
Two of the most significant relief provisions for small businesses are SBA loans and Paycheck Protection Program loans.
SBA Loans for Small Businesses
The Small Business Administration (SBA) offers various loan programs under the CARES Act to help small businesses through the coronavirus pandemic. The following programs are available:
– Economic Injury Disaster Loans (EIDL) & Emergency Economic Injury Grants: EIDL loans provide up to $2 million in assistance to small businesses affected by COVID-19.
In addition, the Emergency Economic Injury Grants are grants offering up to $10,000, both of which are aimed at helping businesses meet their financial obligations. – Small Business Debt Relief: This program provides debt relief to small businesses with existing non-disaster SBA loans, such as 7(a) and 504 loans, by providing financial support such as forgivable loans for payroll, rent and utility costs, among others.
– Paycheck Protection Program (PPP): This program is a forgivable loan program designed to help small businesses with payroll, rent, mortgage interest, and utilities expenses.
– Employee Retention Credits: Companies that have experienced a significant decline in revenue can take advantage of employee retention credits.
The credits cover 50% of the wages paid to employees, up to a maximum of $10,000 per employee. The program runs until December 31st, 2020.
Eligibility and Usage of PPP Loans
PPP loans are forgivable loans for businesses who need help paying for employee wages, rent, utilities, and health insurance premiums. The standards for forgiveness are the borrowers must retain their employees on the payroll for eight or 24 weeks and can use no more than 40% of the loaned money to cover non-payroll expenses.
Eligibility for PPP loans is open to small businesses and most nonprofits and is also offered to sole-proprietors, independent contractors, and self-employed individuals, among others. Small businesses also include companies with fewer than 500 employees.
Borrowers use the PPP loan money to cover payroll costs, such as salaries, wages, commissions, and tips, and other expenses such as rent, mortgage interest, and utilities. The forgiveness of the loan is dependent on maintaining employee headcounts.
In addition, small businesses that take out a PPP loan should note that participants in the program are excluded from deferring Social Security taxes under the CARES Act.
Conclusion
The CARES Act has provided a raft of provisions aimed at providing financial relief to small businesses. SBA loans and PPP loans are among the most extensive relief programs being offered.
By taking advantage of these programs, small businesses can stay safe from financial collapse during an otherwise unprecedented and uncertain time. Nonetheless, these uncertain times could still take a heavy toll on small businesses and their employees, making it an ideal time for owners to review their budgets and seek professional assistance to ensure they mitigate the impact of the virus on business performance and well-being.
The CARES Act introduced a range of provisions to help Americans tackle the financial difficulties brought about by the COVID-19 pandemic. These provisions include economic relief for individuals, small businesses, and homeowners.
The article discussed the CARES Act’s impact on student loan debts