Count Your Stimulus Blessings In Spite Of COVID 19

The bad news is the Coronavirus virus is crushing our nation physically, mentally, emotionally and financially. There is no end in sight and now it is predicted a recession is on the way if not already here. The good news is that our government has made some bold financial moves that just might turn things around as the pandemic subsides. The stimulus legislation that has been passed thus far (we hear more is on the way) may get the economy train back on the track, even though that journey may be bumpy along the way.

The Federal Reserve pushed interest rates lower, and the IRS has granted filing and payment relief to taxpayers. The latest stimulus bills will help businesses stay open or reopen, and cash payments made directly to individuals will help families who have taken a financial hit due to layoffs or illness. Additional ideas are on the way regarding unemployment compensation, forgiveness of SBA loans and more. Make sure you, your family and your business are aware of and taking advantage of these stimulus measures already in place:

Americans will be getting stimulus checks soon which will pump massive amounts of cash into the economy ASAP. The stimulus checks will actually be advanced payments of a new tax credit added by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The checks will be worth up to $1,200 for each taxpayer or $2,400 for married couples who file a joint return, plus $500 for each qualifying child 16 years old or younger. The check amount will be gradually reduced for single filers with an adjusted gross income above $75,000, joint filers with an AGI above $150,000, and head-of-household filers with an AGI above $112,500.

An additional $1 billion is being pumped into the unemployment compensation system to ease the burden on states paying unemployment benefits. States are also directed to ease eligibility requirements and access to unemployment benefits for workers who do lose their job. The federal government will also pay 100% of coronavirus-related extended unemployment compensation, instead of the usual 50%. The CARES Act provides up to 39 weeks of unemployment benefits for self-employed people, independent contractors and others out of work because of the coronavirus pandemic who don't otherwise qualify for benefits. Weekly unemployment checks are also increase by $600 through July. States are to waive the normal one-week waiting period before paying benefits. An additional 13 weeks of benefits is available now too.

Paid sick and family leave for many workers affected by the coronavirus outbreak was expanded with the Families First Coronavirus Response Act on March 18, 2020. Under the new law, employers with fewer than 500 workers are required to provide up to 80 hours of paid sick leave to employees affected by the virus. Workers can take paid leave if they are sick or quarantined, or if they have to care for a loved one, or care for minor children who are home from school or day care. Full pay is available for workers who are sick or quarantined (up to $511 per day), but workers taking qualified sick leave for other reasons only get two-thirds of their normal wages (up to $200 per day).

The new law also extends the existing Family and Medical Leave Act (FMLA) to cover a worker's absence to care for a child home from school or daycare. After 10 days away from work, employees will receive two-thirds of their regular salary while on coronavirus-related FMLA leave. However, this pay is limited to $200 per day ($10,000 in total). The expanded FMLA provisions generally apply to employers with fewer than 500 employees. If you are an employer with less than 50 employees, you may request relief from this provision.

The Families First Coronavirus Response Act also provides self-employed people with two refundable tax credits tied to the amount of time they can't work because of the coronavirus outbreak. The sick leave credit compensates self-employed people for up to 10 days away from their business for a reason that would entitle them to coronavirus-related sick leave if they were employees. The family leave credit covers up to 50 days away from work for any reason that would qualify an employee for coronavirus family leave. Both credits have limits based on the business owner's average daily self-employment income and specific reason for missing work.

The IRS extended the April 15th deadline for filing tax returns and paying your tax bill to July 15, which applies to both return filing and tax payments. Penalties and interest won't apply if you pay any tax due before the extended deadline. This relief also applies to 2020 estimated tax payments, and 2019 contributions to an IRA or HSA, that would otherwise be due on April 15. Some state's tax agencies have also extended filing and/or payment deadlines for your state income tax and other state tax.

There are several student loan relief measures in the CARES Act. First, student loan payments are deferred until September 30, 2020, without penalty or interest for all federally owned loans. This covers over 95% of student loan borrowers. Collection activities against borrowers behind on payments will also be suspended. Second, students who leave school for a coronavirus-related reason will also have student loan obligations cancelled and won't have to return grants. Likewise, students participating in work-study programs will still be paid if they're unable to fulfill their obligations because of the coronavirus pandemic. For students who drop out of school as a result of the coronavirus, their grades also won't affect the academic requirements to continue receiving Pell Grants or student loans.

To encourage charitable giving in 2020, the CARES Act includes two tax provisions that reward people who donate to charity. People look to churches, food pantries, and other charitable organizations for help in times of suffering. First, a new "above-the-line" deduction of up to $300 is allowed for cash donations to charity in 2020. Donations to donor advised funds and certain organizations that support charities are not deductible. But you can't claim this deduction if you itemize deductions on your 2020 tax return only if you claim the standard deduction. Second, for taxpayers who do itemized on their 2020 return, the 60% of adjusted gross income limit that normally applies to cash contributions is waived. That means you can deduct more of your charitable cash contributions this year. Donations to donor advised funds and supporting organizations don't count.

The CARES Act suspends RMDs for 2020. This applies to both first-time RMDs due April 1 and to other RMDs that aren't due until December 31. This helps Seniors worried about having to take RMDs when the stock market has tanked. Retirees would be forced to sell their investments for a loss or at a low price to avoid the hefty RMD penalty. The CARES Act includes a number of provisions that make it easier to get up to $100,000 of your money out of a retirement account if you or a family member are infected by the coronavirus, or experience adverse financial consequences because of it and repayment requirements are relaxed. If you're affected by the virus, the 10% penalty for withdrawals by people age 59½ or younger is waived and taxes on withdrawals will also be spread out over three years. You can also recontribute the money to an eligible retirement plan within three years, without regard to that year's cap on contributions, and have it treated as a tax-free rollover.

The CARES Act includes mortgage relief provisions for certain homeowners with a federally backed mortgage if they are experiencing financial hardship due to the coronavirus crisis. You have to request it and affirm that you are suffering financially from the COVID-19 pandemic. Mortgage payment relief will initially be granted for up to 180 days, but you can submit a second request for up to 180 additional days. No additional fees, penalties, or interest can be imposed by the lender during the time a homeowner is not making mortgage payments. The CARES Act also imposes a 60-day foreclosure and eviction moratorium for homeowners with federally-backed mortgages. The 60-day period starts on March 18, 2020.

Businesses can benefit from SBA Economic Injury Disaster Loans as well as Paycheck Protection Program Loans which offer some loan forgiveness. Both encourage employers to keep employees on the payroll and offers them a much needed cash infusion to stay afloat till the pandemic subsides. Read our prior article here: https://www.fuoco.com/component/content/article/554-cares-act-and-sba-loan-update-and-comparison.

Contact Us: More information on each of these topics is available on our website Coronavirus page: https://www.fuoco.com/component/content/article/540-coronavirus-updates. Our tax advisors and business consultants have plenty of ideas how YOU can increase your cash flow and improve liquidity! Email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it with your questions.