The $2 trillion-dollar Coronavirus Aid Relief and Economic Security (CARES) Act was recently approved to stimulate the economy during the COVID-19 crisis, which is shuttering many businesses and leading to layoffs. More than 6.6 million workers have already applied for unemployment compensation and that number will continue to increase as shelter-in-place orders are extended.
The following will provide some guidance of what is offered through the stimulus package for personal payments, unemployment, relief for renters and student loans.
PERSONAL STIMULUS PAYMENT
A one-time $1,200 payment was approved for single adults with an income below $75,000, who paid taxes in either 2018 or 2019. Couples making less than $150,000 combined can receive $2,400 based on their tax contribution. A qualified adult with dependent children (up to age 17) may also receive $500 per child. There are restrictions and guidelines as to who can and will receive a payment. Nerd Wallet has a calculator to give you a general idea of what you can expect.
EXPANDED UNEMPLOYMENT COMPENSATION
Unemployment compensation is administered by each state as a support program for workers who have found themselves out-of-work through no fault of their own. Generally, unemployment compensation has been offered mainly to full-time employees. However, the stimulus package has expanded the program to include self-employed, part-time, and furloughed workers who are affected by the Coronavirus.
In addition, the expanded program has extended the amount of weeks of unemployment aid. The full number of weeks and percentage of pay varies by state. For many states, 26 weeks is the typical amount of coverage. The Federal CARES Act adds 13 additional weeks, so a worker would now receive 39 weeks instead of 26 weeks. Information is available at the following links based on where you work: Pennsylvania; New Jersey; and Delaware.
The Federal CARES Act also provides an additional $600 added to the calculated payment amount of aid each week.
The one week waiting period to receive funds has been waived; however, the processing time is longer due to the volume of claims.
Please note: the additional $600 payment is considered income when in review for participation in other programs outside of Medicaid and Children’s Health Insurance Program (CHIP). It may affect your eligibility for other programs.
The Expanded program remains open until December 31, 2020.
WHO IS ELIGIBLE?
WHO IS NOT ELIGIBLE?
RELIEF FOR RENTERS
There is a nationwide moratorium for landlords who have mortgages backed or owned by Fannie Mae, Freddie Mac, or other Federal entities for 120 days. No penalties or fees can be charged for non-payment of rent.
Private owners are bound to the rules of their state. Renters should try to make arrangements with their landlord if they cannot pay.
STUDENT LOANS
Previous to the passage of the CARES Act, the Federal government had announced two months of waived payments and a halt to interest. The stimulus package extends this suspension of payments for any student loan held by the federal government until September 30, 2020. This does not mean loan amounts will be deducted – it just means that you can suspend payment until September and then pick up where you left off at your last payment. If you choose to suspend payments, after August 1, 2020, you will receive a notice (if eligible) to enroll in an income-driven repayment plan.
WHO IS ELIGIBLE?
WHO IS NOT ELIGIBLE?
Please remember that details about this bill continue to emerge. We’ll try to provide updates on other areas of the bill as we are able, to ensure the Peirce community stays informed. This story is not legal advice. If you have questions about the CARES Act, please speak with your tax professional or a lawyer.
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