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The CARES Act: Individual Benefits Overview
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to help Americans as they face the consequences of the COVID-19 pandemic.
It includes various benefits for businesses and individuals alike. Below is a brief overview of some of the most important benefits for everyday Americans.
Unemployment insurance availability has been expanded to cover those who may not usually qualify, such as people who are self-employed or have a light work history. Those diagnosed with COVID-19 or who are caring for someone with it may also qualify. The benefits of unemployment insurance have also been expanded. Those who qualify can receive an additional 13 weeks of eligibility as well as an extra $600 a week until July 31st, 2020.
Payments and interest accrual for federally owned student loans has been automatically suspended from March 13 to September 30, 2020. This means that those who choose to can pay down their previously accrued interest and principal, but borrowers will not be punished if they don’t pay during this time.
For properties that participate in federal assistance programs or have federally backed mortgage loans, landlords cannot evict a tenant for nonpayment through July 25th. On that day, any landlord that intends to evict a tenant will need to issue a 30-day notice. This means that, all together, the protection extends until August 24th, 2020.
The deadline for filing and paying taxes has been extended to July 15th, 2020.
Thanks to the CARES Act, homeowners with federally backed mortgages can suspend their payments by requesting a forbearance. This means that they will not need to make payments during the approved forbearance period. In order to apply, you’ll need to inform your lender that COVID-19 has made it difficult for you to make your payments, ideally through a letter. If you’re approved, the payments won’t be forgiven and will need to be paid at a later date, but you can put off paying them for now. Similarly, interest will continue to accrue. A forbearance will not have a negative effect on your credit score, but lenders will be able to see that you had one.
Those impacted by COVID-19 can take an early hardship withdrawal or loan from their retirement funds of up to $100,000 without penalty. Even though the penalty has been waived, taxes will still need to be paid. It’s important to note that early withdrawals should only be done when absolutely necessary as draining your retirement savings will impact your financial security in retirement.
Expanding on the Families First Coronavirus Response Act (FFCRA), the CARES Act states that testing and preventative measures, such as future vaccines, for COVID-19 should be free for everyone, whether they have insurance or not. The tests need to be approved by the FDA in order to qualify. Unfortunately, despite this legislation, some people are still receiving bills surrounding testing for COVID-19. This is because the actual visit to the hospital or doctor’s office beyond the test itself may or may not be covered. Additionally, “surprise bills” for out of network visits have resulted in complicated situations for some seeking tests.
A new above-the-line deduction can help those who give cash to nonprofits get back some money on their taxes. Individuals who do not itemize their taxes can deduct up to $300 of qualified charitable donations. For those who do itemize, they can deduct up to 100% of their AGI for 2020.
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