What individuals and families can expect from the CARES Act

Last Friday, the CARES Act was passed. This bill was designed to support individuals, families, and businesses affected by the COVID-19 pandemic. There are several important ways that individuals and families benefit from the CARES Act. To learn more about the CARES act and how it can help you and your family, contact us.

Stimulus Payment

Individual eligible taxpayers with an adjusted gross income of $75,000 or less* will receive a stimulus payment for up to $1,200, plus $500 per child who is 16 or under. (For those that report over $75,000, the stimulus payment is reduced, and is not given to individuals earning $99,000 or more.)Eligible Married couples who file taxes jointly with an adjusted gross income of $150,000 or less* will receive a stimulus payment for up to $2,400, plus $500 per child who is 16 or under. (For those that report income over $150,000, the stimulus payment is reduced, and is not given to married couples filing jointly earning $198,000 or more.)The stimulus payments are not taxable, and at this point, there are no drawbacks if a taxpayer received the payment and makes over the thresholds in the future. The payments are expected to be delivered via direct deposit if the IRS already has the taxpayer's bank account information, or by a mailed paper check.

Retirement Accounts Provisions

The bill includes a provision that will suspend all required minimum distributions from IRAs and retirement plans for 2020. In addition, early withdrawal penalties from qualified retirement accounts will be waived for up to $100,000 for those who can prove they have been financially affected by the virus. These withdrawals will need to be paid back over three years.

Student Loans Payment Waiver

For student loans borrowed from the federal government, two months of student loan payments will be waived. Also, payments on the loans will be suspended until September 30, 2020.

Health Savings Account Provisions

The ability for taxpayers to use a health savings account (HSA) or flex saving account (FSA) for over-the-counter medicine has been permanently restored.

Expanded Unemployment Benefits

Unemployment benefits have been extended to self-employed individuals. In addition, unemployed workers could receive an additional $600 per week for up to 4 months.

Additional Tax Benefit for Charitable Donations

For those taxpayers who do not itemize deductions in 2020 and make charitable contributions in 2020, up to $300 of the charitable gift will be deducted from the taxpayer's gross income. 

*The income levels for the thresholds are determined by their 2018 tax return if they have not filed a 2019 tax return; if they have filed a 2019 tax return, their income thresholds are based on their 2019 tax return.