COVID-19 Resource Center

March 31, 2020

How the CARES Act Affects Individuals

On March 27, 2020, the government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The $2 trillion aid package will provide financial aid to families and businesses impacted by the COVID-19 Coronavirus Pandemic.

In this article, we will be writing about how the CARES Act affects individuals. To learn how it affects business owners, click here.

Quick Highlights of the CARES Act

  • $290 billion in direct payments to eligible taxpayers
  • $260 billion in expanded unemployment insurance
  • $150 billion for state and local governments
  • $510 billion in expanded lending for businesses and local governments
  • $377 billion in new loans and grants for small businesses
  • $127 billion for hospitals for ventilators and other equipment

How the CARES Act affects individual filers

The Act sends direct payments to eligible adults, expands unemployment insurance, and gives home and student loan borrowers loans more time to make payments. The Act also:

Direct Payments

The CARES Act sends a $1,200 stimulus check to eligible adults earning up to $75,000. Couples earning up to $150,000 will receive $2,400. This is based on 2019 adjusted gross income (or 2018 AGI if you haven’t yet filed your 2019 tax return). Eligible families receive an additional $500 for each child under the age of 17.

You can expect a direct deposit CARES Act payment by about April 16, 2020, if the IRS has your bank information. Checks sent via mail will take longer—potentially months—and they will be sent to the address listed on your most recent tax return. You can file a change of address with the IRS if you have moved since then. 

The amount starts declining after $75,000 of income for individuals ($150,000 for couples) and phases out completely at $99,000 singles ($198,000 for couples). If you made too much in 2019 to qualify for the rebate but your 2020 income qualifies you for the rebate, you’ll claim it as a credit on your 2020 tax return.

If you made too much in 2019 to qualify for the rebate but lost your job in 2020, you will not receive a rebate check. If your 2020 income qualifies you for the rebate, you can claim the credit when you file your taxes next year.

The Internal Revenue Service will update its Coronavirus Tax Relief website as more information becomes available.

Enhanced Unemployment Insurance

Those receiving unemployment insurance through their states’ unemployment insurance receive an additional $600 a week for four months. That’s in addition to what states already pay, which has been extended an additional 13 weeks.

The Act notably extends unemployment insurance benefits to the self-employed and independent contractors—groups that typically don’t qualify for assistance. It allows anyone who couldn’t work because of coronavirus to receive benefits. That includes those who were laid off, became ill, or had to care for someone else with coronavirus.

Click here to find your state’s unemployment benefits and how to apply.

Forbearance of Mortgages

Holders of federally backed mortgages can request forbearance if they have been affected by COVID-19. If approved by the bank, the borrower won’t have to pay the mortgage for 180 days. The bank can’t impose any penalties or other fees. This can be extended another 180 days. Banks must halt foreclosure proceedings until May 18, 2020. You can contact your mortgage holder to request forbearance.

Student Loan Payments 

Borrowers can request to delay payments on federal student loans until Sept. 30, 2020. All federally-owned student loans will automatically have a 0% interest rate until then. Contact your federal student loan servicer to request forbearance.

IMPORTANT: Only loans owned by the Department of Education are eligible. Most federal student loans are owned by the government, but some loans issued under previous programs are held by private lenders or schools.

If you have any questions or need assistance with requirements outlined in the bill, please contact Darren Wendroff at darren@wendroffcpa.com.

To learn about how the CARES Act affects business owners, please click here.

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