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Stimulus Benefits for Individuals and Families

As of April 14th, 2020, the federal government has passed three bills meant to provide COVID-19 related relief to individuals, families, businesses, government agencies and healthcare providers.

This FAQ summarizes the main benefits under these bills for individuals and families. 

Stimulus Benefits for Individuals and Families

What are the three stimulus bills passed so far?

  • Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, became law on March 6th. It provides $8.3 Billion to federal agencies to help them prepare for and respond to the COVID-19 outbreak. It also included a small sum for SBA (Small Business Administration) and a waiver for Medicare providers enabling them to offer telehealth services regardless of location.
  • Families First Coronavirus Response Act became law on March 18th. It provides $3.5 Billion for nutritional assistance and waivers, unemployment insurance, emergency paid sick, medical or family leave, and coverage for COVID-19 testing by insurance plans without any out-of-pocket costs.
  • Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”. The mammoth $2.2 Trillion bill became law on March 27th. It provides cash assistance, tax relief, food assistance, rent relief, loan relief for students, extra support during unemployment, enhanced IRA/401(k) withdrawal provisions, payroll protection programs for small businesses, bailouts for big corporations and support for healthcare providers and state and local governments.

Cash assistance for individuals and families. How much is it and who is eligible?

  • Under the CARES Act, adults are supposed to receive $1,200 each with $500 for each child below 17 yrs.
  • This is a one-time payment. Single filers earning up to $75,000 and married filing jointly earning up to $150,000 get the full amount. After this it starts phasing out, vanishing at income levels of $99,000 / $198,000 respectively.
  • You will not have to pay income tax on the above cash assistance.

Do I need to file a tax return to claim the cash assistance?

  • The short answer is NO.
  • By default, IRS is going to take your information from your 2019 or 2018 return.
  • If you do not file but receive Social Security or Railroad Retirement benefits, IRS will take your information from the SSA-1099 or RRB-1099 form.
  • In case none of the above applies to you, you can enter your payment information at the IRS Portal. There is no need to file just to get the stimulus cash assistance.
  • Non-filers who have dependent(s) under age 17 are advised to anyway use the above IRS Portal to make sure they claim the $500 per child cash assistance.

I heard that I may file my 2019 tax return by July 15th instead of April 15th. What if I owe any taxes?

  • The deadline for filing 2019 federal tax returns has been extended from April 15th to July 15th, 2020.
  • This includes the deadline for paying taxes. If you owe any taxes on your 2019 federal tax return, you may pay them by July 15th without incurring any interest or penalties. IRS News Release.
  • If you are expecting a refund, it may be a good idea to file as usual. The sooner you file, the quicker you will receive your refund.

Unemployment Insurance. What do I need to know? Do I still file with my State for enhanced benefits?

  • 16.8 million initial jobless claims were filed in the last few weeks. This number is expected to climb higher. The bills do provide relief for those who have lost their job.
  • Unemployment claims are handled by States. You still need to file any unemployment claim with your State.
  • The CARES Act adds $600 per week on top of your State’s base amount for four months.
  • The duration has also been extended by adding 13 weeks to your State’s maximum number of weeks for unemployment benefits.
  • The additional benefits listed above run out at the end of the year on December 31st, 2020.
  • Read more at California EDD site.

Can business owners, Self-employed, Freelancers and Contractors also claim unemployment benefits?

  • The CARES Act has created a new Pandemic Unemployment Assistance program for those who do not qualify for regular unemployment benefits. This includes business owners, self-employed individuals, independent contractors and those who have exhausted their regular UI benefits.
  • To be eligible, you may need to show that your work was impacted by COVID-19, for example if you were caring for someone who was infected with COVID-19 or if you were quarantined or under lockdown and unable to telework.
  • Details are still being worked out by many States. California residents may click California EDD Pandemic Unemployment Eligibility for further information.
  • Also take a look at PPP under Small Business towards the end of this FAQ.

Food assistance. Is there any additional support for programs like SNAP?

  • Support for food assistance has been increased through multiple bills.
  • The School Lunch program has been made much more flexible with additional funding.
  • $15.5 Billion has been added to the Supplemental Nutritional Assistance Program aka SNAP, as many more applications to this program are expected.
  • There is additional support for community food distribution programs like Food Banks.
  • Read more HERE.

I am finding it difficult to continue paying my rent. What can I do?

  • You will not get any cash from the government for paying your rent. But there is relief in other form.
  • The CARES Act places a 120-day moratorium (from March 27th, 2020) on evictions due to non-payment of rent where the landlord’s mortgage is owned by federal entities like Fannie Mae or Freddie Mac. This equates to about 70% of all mortgages.
  • In addition, your landlord may not charge any fee or penalty for non-payment of rent during the moratorium.
  • For more details go to the National Housing Preservation Database.

I am paying off student loans. Do I get any relief from the monthly payments?

  • The interest rate on Direct Loans, Federal Family Education Loans and Federal Perkins Loans has been temporarily set at 0% (zero percent) during March 13th – September 30th, 2020.
  • Some of the above loans may be owned by commercial lenders, in which case they may not be eligible for the relief.
  • Furthermore, payments on such loans have been temporarily suspended. This ‘administrative forbearance’ is in effect during March 13th – September 30th, 2020. Auto debits will be suspended during this period.
  • For further details, go to Federal Student Aid.

Are there any changes in the way IRA contributions, distributions and withdrawals are handled?

  • Since the 2019 federal tax filing deadline has been extended to July 15th, 2020, the deadline for making 2019 tax year contributions to your IRAs and HSAs has been extended to July 15th as well.
  • Required Minimum Distributions (RMDs) from your IRAs or 401(k) are suspended during calendar year 2020.
  • If you have IRAs which you can tap in an emergency, you may withdraw up to $100,000 during 2020 if you are impacted by COVID-19. There is no penalty and the money can be used for any purpose. You may elect to spread the taxes over a period of three years. If you pay the money back into IRAs within three years of withdrawal, you may be able to reclaim taxes paid earlier on the withdrawal. (Even if you are able to do so, an IRA withdrawal may not be the right step in your situation. Consult a financial advisor)
  • On similar lines as above, you can take a loan of up to $100,000 from your 401(k). The earlier limit used to be $50,000. Note that there are time limits.
  • Get more information at COVID-19 Retirement Plan Changes Q&A.

What about Testing & Treatment for COVID-19? Am I covered?

  • Testing for COVID-19 is free if ordered by your healthcare provider. You should not have to pay any out-of-pocket costs. This applies to all health insurance plans, including Medicare and Medicare Advantage.
  • Treatment is another matter. While health insurance plans will cover COVID-19 related treatment, you may still need to pay your share of the costs. How much it will cost out-of-pocket depends upon your plan.
  • Telehealth options have been made more flexible, especially in these times when virtual care has become a necessity.
  • We have an entire FAQ dedicated to this topic especially as it applies to Medicare. Read more HERE.

Am I entitled to more than usual paid Sick, Medical or Family Leave?

As a result of the COVID-19 bills, employers with less than 500 employees are supposed to provide:

  • Paid Sick leave to employees due to COVID-19 impact, amounting to the average of two-week’s work hours. For full-time employees, this usually translates to 80 hours or 10 days. Pay during this leave is capped at $511 per day or, under certain situations, at 2/3 of the regular pay up to a maximum of $200 per day.
  • Up to an additional 10 weeks of FMLA leave due to public health emergency, called Public Health Emergency Leave (PHEL). The leave is paid at least at 2/3 of the pay rate capped at $200 per day.
  • There are exceptions to the above. For more details go to Department of Labor FFCRA.

To compensate employers for the above, they are allowed credit against their Social Security tax liability equal to 100% of the payments plus health expenses like employer-paid health plan premiums. They are supposed to receive full credit even if their tax liability is lower.

I am a Small Businesses Owner. Do I get any breaks as my business has really suffered?

Small businesses are eligible for a number of credits, tax breaks, loans and grants. Some of them are as follows. There may be other programs available as well. Also note that some of these programs are still evolving and getting implemented.

  • Employee Retention Credit. This equals 50% of eligible employee wages paid in a 2020 quarter, with an overall cap of $10,000 per employee.
  • FICA taxes. Employers and self-employed individuals can defer the employer portion of Social Security part of FICA taxes during March 27th – Dec 31st, 2020 (6.2% of an employee’s first $137,700 in wages). Half the deferred amount will need to be paid by 12/31/2021 and the remaining half by 12/31/2022. This deferment is available whether or not the business was impacted by COVID-19.
  • Paycheck Protection Program (PPP). Small businesses, including self-employed individuals and independent contractors are eligible to apply for the PPP whereby you can borrow up to 2.5 times your average monthly payroll costs last year from the Small Business Administration through authorized lenders. Payroll for this purpose is capped at $100,000 annually per employee. The loan may be forgiven if you use at least 75% of it for payroll purposes within eight weeks. More details are at SBA Coronavirus Relief Options.
  • Economic Injury Disaster Advance Loan. This is worth up to $10,000 per business and may not have to be repaid. Apply through SBA at the above provided Link.
  • Additional debt relief options may be available to you. Check out the link above for SBA.

Additional Links & Resources

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Last Updated: 11-17-2019