The US President signed into law, the largest emergency relief in the history of the country, a $2.2 trillion coronavirus stimulus package. The package is meant to provide relief to people from different sectors who have taken a financial hit over the past several weeks.
The Coronavirus Aid, Relief and Economic Security (CARES) Act is expected to provide relief for the millions of Americans, businesses and hospitals suffering after the coronavirus pandemic.
Details of the COVID-19 stimulus package:
The major factor of the COVID-19 stimulus package is the $250 billion that will be utilized to make direct payments to U.S. taxpayers. Also, the date for federal tax payments has been postponed to July 15 without charging any interest or penalty.
Let’s now go through a few factors in detail which will help you understand what the Coronavirus stimulus package has in store for you.
Coronavirus stimulus package checks for Individuals and Joint Taxpayers:
As per the CARES Act, stimulus checks have been sanctioned with an amount of up to $1200 for individual tax payers, whereas $2400 has been sanctioned for joint tax payers. An additional $500 has been sanctioned for every qualifying child. However, these amounts are subject to verification of information from your most recent tax filings.
What should I do to receive my Coronavirus stimulus package check?
The first thing that you should do is to file your 2019 income tax return. The first fund will be given to people who have filed tax returns for the last two years and have an approved direct deposit.
Are people on Social Security eligible for Coronavirus stimulus package?
Direct deposit payments will be automatically issued to people on Social Security. People earning up to $75,000 of adjusted gross income, and having a valid Social Security number will receive a $1,200 payment.
Are parents and dependents part of the COVID-19 economic stimulus relief?
Parents will receive $500 for every child aged 16 or younger; dependents above the age of 16 will not be eligible to receive direct payments.
What about the Student Loan Payments? Do they have a special provision under the CARES Act?
Employers will be able to make payments on behalf of their employees. Payments up to $5250 annually will be considered tax-free. In this way, loan payments will be excluded from the employee’s income.
What about disabled adults who are dependents? Will they receive coronavirus stimulus package checks?
Disabled adults who are dependents are among the groups that have been excluded of the stimulus payments.
Do unemployed have a special provision in the COVID-19 Economic Stimulus Relief?
According to the CARES Act, the unemployed will receive an extra $600 on a weekly basis for four months till July 31st. This also includes part-time employees, independent workers, freelancers, gig workers, and self-employed.
Is there any financial assistance for non-profit organizations under the CARES Act?
As a part of Coronavirus stimulus package, $349 billion have been sanctioned for small business administrations to distribute through Paycheck Protection Program (PPP). All the non-profit organizations, contractors, and self-employed individuals will be eligible to receive assistance.
An additional $454 billion have been sanctioned as part of the Federal Reserve lending program. Loans under this fund will be limited to 5 years and will help aid non-profit organizations and other businesses with 500-1000 employees to retain 90% of their workforce while making them eligible for entire compensation and other benefits.
Is there any special provision for early retirement withdrawal?
If a person younger than 59 makes an early retirement withdrawal, a penalty of 10 percent is charged on the distribution amount. However, the Coronavirus aid package makes it easier for people struggling financially to make an early withdrawal up to $100,000 from their retirement account without charging any penalty.
These distributions will be subject to regular income tax. However, the CARES Act permits you to claim this money on your tax return over three years. The entire distribution amount can also be repaid within three years and the taxes paid can be recouped.
Penalty-free withdrawals are permitted under the following cases:
- You, your spouse, or a dependent has been diagnosed with Coronavirus.
- You are facing adverse financial circumstances as you have been quarantined, furloughed, laid off, or have had your hours reduced due to COVID-19.
- You are unable to work due to lack of child care because of the ongoing Coronavirus pandemic.
- You own or operate a business and need to shut down or operate in short intervals owing to COVID-19.
- You are going through financial crisis owing to other factors as per guidelines issued by the IRS.
The above article helps you to understand what Coronavirus stimulus package has in-store for you. However, TaxAct recommends that you consult a financial advisor to check how you can benefit from the CARES Act.