What The Coronavirus Stimulus Package Means For You
On Friday, March 27th, 2020, Donald Trump signed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. This is a $2 trillion stimulus package, which is the largest relief bill ever passed in the United States. It surpasses the American Recovery and Reinvestment Act, which was signed by President Obama in 2009 as a response to the Great Recession, and the National Industrial Recovery Act that was signed in 1933 by President Franklin D. Roosevelt during the Great Depression.
I know that was a lot of words and I know that these bills are incredibly long and can be difficult to understand. That’s why I’m here! I’m here to explain what the CARES Act actually means for you in your daily life.
A couple of notes before I get started:
This bill is 800 pages long. I won’t be able to break down or understand every single detail in it. At the bottom of this piece, I will link to more resources so that you can read more about the legislation.
I am not a policy expert. I did get my degree in Political Science, but I haven’t worked on the Hill in my career, aside from a bit of environmental lobbying I did in 2009 and 2010. However, I’ve been talking to my policy expert friends and I’ve been reading a lot of articles written by very smart people.
Below is what you can expect, thanks to the CARES Act:
You Likely Have a Check Coming In the Mail
One of the biggest purposes of this stimulus bill is to alleviate some financial strain during this health crisis. The bill allocates approximately $300 billion just for these checks. If you earn less than $75,000 as an individual or $150,000 as a family, you can expect to receive $1,200 per adult. Children under 16 will get $500 each. For example, if you are a family of four with less than $150,000 taxable income, you will receive $3,400: $1,200 per adult and $500 per child.
If you earn over $75,000 as an individual or $150,000 as a family, you are not out of luck. For every $100 you earn over $75,000 or $150,000, you lose $5 of stimulus money. This decrease applies to children in these households as well. This is capped for individuals making above $99,000 and couples making $198,000. The earnings threshold is measured by your adjusted gross income or AGI. AGI is the amount you earn each year after tax deductions, tax credits, and exemptions.
This does not apply to everyone, though, unfortunately. Specifically, this benefit doesn’t apply to undocumented folks in the United States. You must have a social security number to receive a check. If you do not, you will not be eligible. Green card holders can get a “work eligible social security number”. Learn more about this here. I also recommend that you talk to your immigration attorney about this, if you have one.
A few things to keep in mind:
These checks are a one-time deal. You will not be receiving any further payments.
Checks will be mailed out in about three weeks. If you have direct deposit set up with the IRS, you will get your money faster. To set up direct deposit with the IRS, go here.
This money does not count as taxable income, meaning you will not have to pay taxes on it. After all, our tax money is how this bill is being funded in the first place!
These amounts are based on your most recent tax return. If you haven’t yet filed for 2019, the amount will be based on your 2018 tax return.
Use this helpful Washington Post calculator to see if you’re eligible and for how much.
You Don’t Have to Pay Federal Student Loans for Six Months
Another huge piece of this stimulus bill is the suspension of federal student loan payments. Last week, the Trump administration announced that they were implementing 0% interest on all federal student loans and allowing borrowers to suspend payments for up to 60 days. However, this legislation has expanded upon this. Lenders have to immediately stop requiring payments and accruing interest on federal education loans. This will continue through September 30th, 2020, which is a full four months longer than the original suspension. Nonpayment during this period cannot be used to affect credit scores or loan forgiveness qualification.
For those who are relying on student loan forgiveness programs, this suspension of payments will not hurt your eligibility for forgiveness. According to the bill, each month for which a loan payment was suspended will be treated as if the borrower of the loan had made a payment. That means that these borrowers will not lose six payments out of the 120 payments they need to make in order to qualify for student loan forgiveness.
A couple things to keep in mind:
This is going into effect automatically. You don’t have to do anything to make this payment suspension happen.
This does NOT apply to private loans. You have to contact your private lender if you need to put your payments on hold and see if they are offering any leniency.
If you want to continue making payments, you can. If you can comfortably afford to do this, you will be doing it without any interest accruing, meaning your money will go much further for the next six months.
You Can Get More Money Through Unemployment
Just two notes before I go into detail on this piece:
When it comes to unemployment, the details vary from state to state. In order to understand exactly what applies to you if you need to file for unemployment, you’ll need to do your own research in your own state.
I am not an unemployment expert, nor an attorney! I can’t give you specific unemployment advice. You should contact the unemployment office in your own state if you have questions.
Okay, now that that’s out of the way, I’ll dig in. First, I’ll reiterate that unemployment benefits are managed by your individual state. That will not change due to this legislation. The bill increases benefits and broadens who is eligible, but the states will continue to be the ones paying those who qualify. About $250 billion of the $2 trillion in this bill goes to unemployment benefits specifically.
Here are the main details:
Unemployment insurance is extended for 13 weeks. Folks nearing the maximum number of weeks allowed by their state would get this extension. New filers would be allowed to collect benefits for the longer additional period.
The bill adds $600 per week from the federal government on top of whatever base amount an individual receives from their state. This additional payment will last for the next four months.
For part-time workers who aren’t typically covered by unemployment benefits in their state, they will be eligible for the $600 federal weekly benefit.
For those who are self-employed or freelancers, unemployment benefits are not usually available. However, under the CARES Act, a new, temporary Pandemic Unemployment Assistance program is created. This will exist through the end of 2020 to help people who lose work as a direct result of the COVID-19 crisis. You can only qualify for this if you have lost work due to COVID-19.
You Don’t Have to File Or Pay Your Taxes Until July
I wrote last week that the federal tax filing date had been delayed until July 15th, but that you would still have to pay what you owe. That has since changed! Both the federal filing and payment dates are now July 15th, 2020. This also applies to estimated quarterly taxes, if you are a freelancer. This means that you have an extra three months to organize your documents to get your taxes in order. It also gives you three more months to save up the amount that you may owe.
This bill, however, does not necessarily change the due date for state taxes. Each state will decide that for themselves. Many of them are also extending to July 15th, but you will have to check to be certain.
Even with this delay, you can still file your taxes now if you want to. The return will still get processed, as will any refund that you are due.
Your Health Insurance Company Must Cover COVID-19 Testing, Treatments, and Vaccines
Under this bill, all insurance companies are required to cover any COVID-19 related expenses. This includes testing, treatment, and any eventual vaccine. If your insurance company gives you any trouble, point them to this new requirement. If you don’t have insurance at the moment, see if your state has reopened the healthcare marketplace with a special enrollment period.
Of course, this bill is not a sweeping solution for everyone. There are a lot of people who will be left out. Anyone without a social security number or a “work eligible” social security number does not qualify. That means that any undocumented folks will not receive this money or other support. These are people, by the way, who are still most likely paying taxes on any income they are making. Yet, they won’t receive the benefits in this stimulus package. People who couldn’t afford to file their taxes in the last couple of years will also be impacted, since the stimulus check is based on your most recent tax return.
Plus, people over the age of 16 who are claimed as dependents on their parents’ tax return also don’t qualify for a stimulus check. You have to be under 17 or filing your own tax returns as an individual, not as a dependent, to receive a check. So obviously, this wasn’t a perfect bill. And don’t even get me started on the anti-choice language that was inserted into the bill by Republicans. But it was something that was done to help people and businesses during this difficult time. Hopefully it helps you, even a little bit.
All of the information above only applies to individuals. For small and large businesses and other entities, there are additional benefits in the stimulus package. I won’t go into them this week, but you can learn more about them in this NPR piece.
To learn even more about the CARES Act and how it will impact you and the rest of our country, check out these helpful resources: