COVID + Credit: 4 Things To Know About Stimulus Checks & the CARES Act

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The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, approved in late March by Congress, provides relief across the economic spectrum — provided you can understand every opportunity the massive piece of legislation offers. With news during the Coronavirus/Covid-19 pandemic breaking at a rapid pace, it can be hard to decipher the legislative efforts aimed at helping you. We’re here to guide you through that process. Here are four things to know about the CARES Act.

1. You may soon receive a $1,200 or $2,400 stimulus check from the government if you set up your tax refund with direct deposit — though it will be a longer wait if you need a paper check.

• Who’s generally eligible: Single adults with a Social Security number and adjusted gross income of $75,000 or less are eligible. For married couples filing joint returns, the income limit to receive a stimulus check is $150,000. Single filers who make more than $99,000 and joint filers with income exceeding $198,000 are not eligible for stimulus payments, nor are those over 16 who are claimed as dependents by their parents (which includes many college-aged people). The IRS determines your eligibility through your latest tax return or a 2019 Social Security statement that shows your income if you have not filed taxes for 2018 or 2019.


• How much can you receive: Most American adults will get a one-time payment of up to $1,200 and married couples will receive up to $2,400, though the exact amount depends on your income. Adults will also receive an additional $500 for every qualifying child. Note that your stimulus payment will be reduced by $5 for each $100 you make above the thresholds listed above. You do not need to apply to receive a payment.


• When might this aid be available: The exact date of distribution is still unclear, but direct deposit payments are likely to arrive by April 17. On April 2, Treasury Secretary Steve Mnuchin said that eligible Americans who have signed up for direct deposit payments should receive them within two weeks. However, if you need a paper check, you may experience some delays. For millions of Americans, some $30 million in paper checks won’t begin distribution until April 24 because the government doesn’t have their banking information. The IRS plans to distribute paper checks to the lowest-income Americans first.

2. As a part of the new Paycheck Protection Program, small business owners may get relief in the form of a partially or fully forgivable loan that will cover 250 percent of their average monthly expenses.

• Who’s generally eligible: Businesses, nonprofits, veteran’s organizations and tribal businesses with 500 employees or less are eligible. There are exceptions for businesses with over 500 employees if they meet the Small Business Administration’s size standards for their given industries. Independent contractors, gig economy workers, sole proprietors and self-employed people are all eligible for the program as well. You can apply for the Paycheck Protection Program at any lending institution approved to participate through the existing SBA lending program — which is comprised of thousands of banks and could include the bank you already use. But, you may have an easier path if you apply with the bank that currently handles your business accounts.
  
  The covered period during which expenses can be forgiven is from Feb.15, 2020 to June 30, 2020, and borrowers can choose which eight weeks during that time frame they want to count toward their loan period. The loan is forgiven at the end of the 8-week period after it is granted, with one caveat: To qualify for forgiveness, employers must retain their employees at their current base pay, or face a reduction in forgiveness equivalent to the percent decrease in number of employees. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost, provided you rehire your employees by June 30, 2020. The application deadline for the Paycheck Protection Program is also June 30.


• How much can you receive: A small business is eligible to borrow the lesser of 250 percent of its average monthly expenses (intended to cover about 8 weeks of payroll expenses) or $10 million. Borrowers are eligible for loan forgiveness equivalent to the sum spent on covered expenses during the 8-week loan period, which include most of a business’s typical operating costs: payroll, rent, utilities and mortgage interest obligations.


• When might this aid be available: Unfortunately, this is currently unknown, as the program has faced launch problems. After a rocky start, banks have begun to open up their loan application portals and have received a huge influx of applications, but they are still figuring out their lending capacity, as well as processing hundreds of thousands of applications from small business owners. Once you apply, your lender should send you confirmation that your application has been received. On April 6, the Federal Reserve Bank announced it would help facilitate lending to small businesses which will presumably speed up the process of distributing the money. Check in with your local lending institution for more specific information, and we will continue to update this article as more details become available.

3. Student loan payments and interest will be automatically suspended on federally held student loans through Sept. 30.

• Who’s generally eligible: The vast majority of federal student loan borrowers are eligible. However, some student loans do not qualify for this benefit, including loans under the Federal Family Education Loan (FFEL) Program, private student loans that are owned by commercial lenders and some Perkins Loans that are held by the institution you attended.


• How much can you receive: If you qualify, you will receive an automatic suspension of principal and interest payments on federally held student loans through Sept. 30, 2020, though that date may be extended with additional legislation.


• When might this aid be available: The federal government had already waived student loan payments and interest for 60 days earlier in March, and this new directive extending that period is already in place, retroactive to March 13. Federal student loan borrowers will not need to take any action to suspend payments, as your federal loan servicer will suspend them automatically.

4. Additional funds are available for unemployment benefits, and many people who aren’t usually eligible for unemployment are likely to receive benefits.

• Who’s generally eligible: The CARES Act expands unemployment eligibility to encompass most workers who have experienced job loss related to Covid-19. You may qualify if you are sick or have been exposed to the coronavirus; if you must care for someone in your immediate family who is sick with the coronavirus; if you cannot reach your place of work because of a quarantine; if you are an at-risk individual who needs to self-quarantine in order to avoid getting sick. However, if you continue to work remotely and receive a paycheck from your employer, it’s unlikely you’ll be eligible for unemployment. If you are asymptomatic (showing no signs of the disease) and are not part of a high-risk demographic but choose to stay home from work, you are also unlikely to be covered by unemployment.


• How much can you receive: This answer depends on your state. As a part of the Paycheck Protection Program, eligible workers will get an extra $600 per week from the federal government on top of their state benefit. Per the Labor Department, as long as you’re eligible for at least $1 of state-level or federal unemployment compensation, you get the full $600. Unemployment benefits are subject to federal income taxes and most state income taxes.


• When might this aid be available: This is also unclear. States are backlogged in processing unemployment benefits applications as the country’s unemployment rate is estimated to be at its highest since the Great Depression, according to The New York Times. In response to the crisis, states have also been incentivized to waive the standard waiting period between the time workers become unemployed and when they are eligible for benefits, which has led to more applications. With all that in mind, the additional $600 will hit your bank account depending on when your state signed an agreement with the Department of Labor. The week ending April 4 or 5 (depending on how your state lays out its calendar) is the first week for which unemployed workers can claim the new federal benefit. Still, expect delays and long wait times before the money starts to flow.

Deciphering the aid available to you and your loved ones is tricky and the situation continues to develop. Check our Covid + Credit Resource Center for more information.