Resources available from the CARES Act

When a crisis hits, figuring out how to access the help that’s available to you is half the battle.

The CARES Act includes benefits that can help you out in a lot of different ways. To help make sense of it all, we’ve broken down our guide into sections. Here’s what the CARES Act means for:

• Cash Stimulus Payments
• Negative Credit Reporting
• Unemployment Assistance
• Student Loans
• Taxes
• 401(k)s
• Mortgages

The most discussed part of the CARES Act has been the direct cash payment, also referred to as an Economic Impact Payment (EIP) or stimulus check, that the government is sending to individuals and families depending on their total income.

These EIPs will not be taxable and will not impact your 2020 tax refund.

How much and for whom?

Coronavirus stimulus checks are being issued for all individuals earning less than $99,000 and families earning less than $198,000 in amounts ranging from $50 to $1,200 based on the individual or household’s adjusted gross income (AGI).

Individuals earning $75,000 or less will receive the maximum EIP amount of $1,200. Above the $75,000 income threshold, stimulus amounts decrease gradually according to income until the maximum AGI cutoff of $99,000 for individuals and $198,000 for married couples. Those with children will also receive an additional $500 per child. You can check how much you should receive using this online calculator. The examples below are based on information input in this referenced calculator.

How to get your stimulus check

The IRS will use the most recent information you gave them for sending your tax refund to issue your CARES Act stimulus check. You will get it in one of two ways:

1. If you got your most recent tax refund via direct deposit, that’s how you’ll receive your stimulus.
2. If your most recent refund was mailed, your stimulus check will be mailed as well.

If the information on your most recent tax refund is still accurate, you don’t have to do anything.

If your mailing address has changed:
If you received your most recent tax refund via mail and have moved since then, you need to update your address with the IRS to ensure your stimulus check is mailed properly.

If you want to switch from mailed check to direct deposit:
The IRS has built a new digital tool to allow those who typically opt to receive their tax refund by check to switch to direct deposit in order to get their stimulus payment more quickly. The Get My Payment tool is now available here.

How to get your stimulus check if you don’t normally file taxes

If you don’t normally file a tax return, or if your most recent tax return was from 2017 or earlier, you’ll need to use the IRS’s new Non-Filers: Enter Payment Info tool to provide a physical address or direct deposit information that can be used to deliver your payment.

The CARES Act includes certain provisions to prevent emergencies that arise as a result of the pandemic from impacting consumers’ credit in the long term.

Accommodations reported as current

The CARES Act offers powerful credit protections, but they’re only activated if you specifically request them.

Specifically, the bill requires lenders to continue reporting accounts as current if the borrower applies for relief from the lender due to the pandemic. That means that as long as you were current on your account prior to the pandemic and proactively request accommodations or relief from your lender, your credit report will not reflect those items negatively. Make sure you get a written copy of your agreement.

Accommodations you can request from your lender include:

• Deferred payments
• Partial payments
• Forbearance for delinquent accounts
• Modification of a loan agreement
• Any other assistance/relief

If you were already delinquent prior to the accommodation being made, the protections here don’t apply. Additionally, this stipulation does not apply to charge-offs.

In order to accommodate the rapid spike in unemployment caused by the pandemic, the CARES Act funded a temporary expansion of unemployment assistance that increases the amount of weekly aid available and broadens the program’s eligibility requirements to include those not normally qualified for unemployment insurance.

More money per week

Unemployment insurance is a state-funded program, so the amount each unemployed person receives varies depending on where they live. The CARES Act adds $600 per week to the base rate the worker receives from the state which extra benefit ends on or before July 31,2020.

Longer benefits collection period

The CARES Act also extends the maximum number of weeks that a worker can collect unemployment by 13 weeks. Those individuals who were already collecting unemployment will be able to extend the standard collection period for their state by 13 weeks as well.

Expanded eligibility for freelancers

Normally, only staffed and pay-rolled workers are eligible for unemployment insurance. Under the CARES Act, gig workers, freelancers and contractors who are out of work as a direct result of the pandemic can apply for unemployment under the Pandemic Unemployment Assistance program.

The CARES Act includes a number of provisions for students designed to help ease the burden of student loan payments. Unfortunately, these provisions only apply to federal loans—commercial student loans are not included in these protections.

Temporary loan deferment

All loan and interest payments on federal student loans are automatically deferred through September 30th, 2020, without penalty to the borrower.

Tax-free employer-sponsored loan repayment program

Employees of companies that offer student loan repayment assistance can potentially take advantage of up to $5,250 of employer-sponsored repayment—tax-free. These payments, which are usually treated as wages, will be excluded from income and payroll taxes. This can benefit both employers and employees. Check with your employer to see what is available to you.

Filing extension

Given that conditions caused by the pandemic have interfered with many people’s ability to file taxes on time, the CARES Act extends the 2020 filing deadline to July 15. Those who have already filed or plan to file early will still receive their refund in a normal amount of time.

Increased deduction

The CARES Act also makes a $300 charitable deduction available for those who don’t claim itemized deductions on their taxes. In other words, it decreases most people’s taxable income by $300.

Retirement accounts are designed to be left alone until retirement, but in emergencies, those savings may be necessary to make ends meet. The CARES Act loosens regulations on 401(k), 403(b) and traditional IRA accounts to make borrowing or withdrawing possible.

No withdrawal penalty

Typically, a 10-percent penalty is placed on withdrawals made from retirement accounts before reaching retirement. The CARES Act eliminates this penalty up to $100,000 for 2020 for coronavirus-related distributions, making it easier for individuals to tap their retirement savings for emergencies if necessary.

Increased borrowing limit

Most employer-funded 401(k), 401(a) and 403(b) plans and government-funded pension plans allow individuals to borrow against the account balance. However, these loans are usually capped at $50,000 or 50 percent of the vested account total (whichever is less).

The CARES Act increases this limit to $100,000 or 100 percent of your vested account balance (whichever is less). You must take the loan out within 180 days of the CARES act and repay the loan within 5 years.

Keep in mind, however, that if you default on a loan you took out from your own retirement fund, you’ll be hit with the 10-percent penalty anyway—and the CARES Act won’t waive the penalty.

For those experiencing financial strain during the health crisis, the CARES Act includes provisions that allow borrowers to pause mortgage payments temporarily for certain types of mortgages. Contact your mortgage servicer to find out what options are available to you.

Forbearance options

Homeowners with federal mortgage loans can place their loans in forbearance for up to 180 days without incurring any penalties or fees. At the end of the initial 180 days, the borrower can extend the forbearance by another 180 days.

Halted foreclosures

In addition to freezing some payments, the CARES Act also halted all foreclosure proceedings until May 18, 2020.,with some exceptions. Contact your mortgage lender to know what is available for you.

Navigating the various forms necessary to acquire the aid you’re owed can feel overwhelming if you’re already dealing with the complications of a health emergency. It’s important to keep in mind that, though these processes may feel complicated in the moment, each will lessen your burden down the line. Being proactive about knowing what benefits you qualify for and how to obtain them will make it easier to get through this crisis with your physical and financial health intact.