We are facing unprecedented times right now with the COVID-19 pandemic. During this time of considerable uncertainty, the US government has passed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The passing of this act provides much relief for Americans while impacting taxes, loans, and health insurance.
At Austin Asset, we want to keep you informed and help you get the assistance you need.
Here’s what you need to know about the CARES Act:
- Most taxpayers will get up to $1200, including people already on Social Security and Disability. For each child that is under the age of 17, parents will receive an additional $500
- Single adults with an AGI of $75,000 or less will get the full amount
- Married filing jointly with an AGI of $150,000 or less will receive $2,400
- Head of Household with an AGI of $112,500 or less will receive $1200
- You will not receive any of the rebate if you are:
- Single with an AGI of $99,000 or more
- Married filing jointly with an AGI of $198,000 or more
- Head of household with an AGI of $146,500 or more
- You don’t have to apply for this rebate. The IRS will automatically send you the rebate within the next few weeks. The IRS will either directly deposit the funds in the bank account you use to receive tax refunds or pay taxes owed. Alternatively, if no bank account is on record, they will mail a check to your last known address.
- To determine your rebate, the IRS will either use your 2019 or 2018 tax return, whichever is the most recent on file.
Note: The deadline for filing 2019 taxes is extended to July 15, 2020.
- You will be able to withdraw $100,000 or 100% of the vested account balance from a qualified retirement account for coronavirus related purposes, penalty-free.
- Coronavirus related purposes include:
- Being diagnosed with COVID-19
- Spouse or dependent is diagnosed with COVID-19
- Experience adverse financial consequences as a result of being quarantined, furloughed, laid off, or having work hours reduced
- Unable to work due to lack of childcare due to COVID-19
- Lost a business because of COVID-19
- Other factors as determined by the Treasury Secretary
- You will be able to spread income tax payments on the withdrawals over a three-year period.
- You will be able to repay the amount tax-free back into your plan over the next three years. These repayments will NOT be subject to any retirement plan contribution limits.
- If you have an outstanding loan from your retirement account that was due to be repaid anytime from March 27 through the end of 2020. You can delay this loan repayment for up to 1 year.
- The act waives your required minimum distributions (RMD) for 2020. If you have already taken an RMD for 2020, you will be able to reverse the transaction.
- Any RMD for single-employer defined benefit plans that are due during the 2020 calendar year are not required to be made until January 1, 2021.
- A new above the line deduction for up to $300 in annual charitable contributions has been added. To qualify, cash must be given. This deduction counts towards contributions made since January 1, 2020.
- The federal government will pay an extra $600 per week on top of whatever base amount you receive from the state. This additional payment will last for four months.
- The legislation added 13 weeks of unemployment insurance. People nearing the maximum number of weeks allowed by their state would get an extension.
- This bill creates a new, temporary Pandemic Unemployment Assistance program to provide relief to those who are self-employed, freelancers, or contractors through the end of this year to help people who lose work as a direct result of the public health emergency.
- The bill requires all private insurance plans to cover COVID-19 treatments and vaccines. It also makes all coronavirus tests free.
- Borrowers under federally backed family mortgages may submit a forbearance request if they are experiencing financial hardship due to the COVID-19 crisis. The lender must grant the request, without penalties, fees, or interest, for a period of up to 180 days (subject to another 180 day extension at borrower’s request). A foreclosure action is prohibited for the 60 day period beginning March 18, 2020. Multi-family borrowers are entitled to forbearance and foreclosure protection on slightly different terms, and renters of such dwellings are provided eviction protection.
If you need help or are looking to have a conversation, we at Austin Asset are here for you.
At Austin Asset, we are Wealth Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.
This article is not intended as legal or tax advice.