The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. This $2.2 trillion recovery package comes at a critical time in the fight against COVID-19. The act is over 800 pages long, which is why we have chosen to highlight some of the key economic provisions below.
Economic Impact Payments
- Most individuals making less than $75,000 per year (or couple making less than $150,000) should expect to see $1,200 per person payments. Families receive an additional $500 per every child claimed as a dependent. These payments are based on your 2019 tax return. If you have not yet filed, the government will use your 2018 return to determining eligibility. Those making over the eligibility threshold will still receive payments (up to a certain point). Use this calculator to calculate your stimulus payment. Visit the Treasury’s page, which is updated, here.
- Those who have been laid off will continue to file and receive unemployment benefits directly from their states. The CARES Act adds an additional $600 per week on top of whatever your state benefit is. This boosted payment will last for four months. To apply for benefits in Massachusetts, visit here.
- Per the MA Unemployment office: The federal government, as of April 3, has advised states against implementing specific programming options providing financial assistance to the self-employed and those not traditionally covered under the regular unemployment program until guidance has been issued. Unfortunately, until more specific guidance is issued, those who would not traditionally qualify for unemployment insurance remain ineligible for benefits through the UI Online application system. However, once guidance is given payments under Pandemic Unemployment Assistance will be retroactive to January 27, 2020.
Federally Backed Mortgage Loans
- Borrowers of federally-backed mortgage loans can request a loan forbearance on their payments (without penalties, fees, or interest) for at least 180 days. In addition, foreclosures on similar mortgage loans are prohibited for at least 60 days and evictions from properties related to several federal programs are also prohibited for a 120 day period. Read more from the Yale School of Management.
Small Business Loans and Grants
- Small businesses have been hit particularly hard by this crisis. The CARES Act provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses who qualify. To learn about eligibility, visit here.
- In addition, the Small Business Administration will provide loans of up to $10 million per business through the Paycheck Protection Program. If employees remain employed through June 2020, any portion of the loan that goes to payroll, rent, mortgage or existing debt may be forgiven. Learn more here.
Student Loan Debt
- The U.S. Department of Education is putting a freeze of federal student loan payments until September 30. This reprieve is automatic and borrowers do not need to request it. Interest will not accrue during this time period.
Retirement Account Withdrawal
- The CARES act waives the 10 percent early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps. The bill also waives required minimum distribution rules for certain retirement plans in calendar year 2020. Read more from Fortune Magazine.
*While the Information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact on the accuracy of the Information.