As you are probably aware, most of the news posted in recent weeks has not been positive. However, we are here to bring some relief and positive news to you! This blog includes several solutions to the economic impact of COVID-19.
One Time Payment Stimulus Checks
Individuals making $75,000 or less will receive a one-time check of $1,200 ($2,400 for couples making up to $150,000). Parents will also receive $500 per child under the age of 17. This amount decreases for individuals making above those amounts. Individuals making $99,000 or more will not receive any payment. Married couples making over $198,000 will also not receive any payment. This is based on your adjusted gross income as shown on your 2018 tax return if your 2019 return has not yet been filed. It will be based on your 2019 adjusted gross income if you have already filed for 2019. It may take a few weeks before individuals can expect to receive a check.
Unemployment insurance benefits will be expanded to more individuals on the federal level. Workers will be offered $600 a week in addition to state unemployment programs. Benefit amounts from California range from $40-$450 a week based on the past 12-18 months of wages earned. Therefore, an individual can earn up to a maximum of $1,050 a week or $4,200 a month. Keep in mind that each state has different unemployment benefits.
California has implemented new benefit programs to help those impacted by the coronavirus as well. California Employment Development Department (EDD) has extended disability insurance claims to those who cannot work due to being infected by the coronavirus. Paid Family Leave has also been offered to those who are unable to work due to taking care of a family member who is sick with the virus. Benefit amounts range from $50-$1,300 a week based on wages in the past 12-18 months. These benefits require a written notice from a physician or state or local health officer.
EDD has also expanded unemployment benefits to those who have reduced work hours or have been laid off due to the coronavirus. This is offered to those who are not ill themselves or who are caring for a sick family member (qualifying for Paid Family Leave or Disability Insurance). Parents who must stay home to watch their children can qualify for unemployment benefits as well. Those who are temporarily unemployed but who expect to return to work may also qualify for these benefits. The one week waiting period for collecting unemployment has also been waived. Those who are self-employed may still qualify for benefits if an employer has paid for unemployment insurance in the past 5-18 months.
The tax filing deadline has been extended to July 15, 2020. Tax payments of up to $10,000,000 have also been extended for both businesses and individuals to July 15, 2020. No extension is necessary for those who file on July 15th. Federal estimated tax payments originally due on April 15, 2020 are now due July 15, 2020. This does not apply to second quarter estimated tax payments. The extension deadline, beyond July 15th, is still October 15, 2020 (extension must be filed). HSA contributions, IRA contributions, Roth contributions and other retirement contributions are now due July 15, 2020 instead of April 15, 2020.
California has also offered tax relief by extending the deadlines for filing, payment, and the first two quarterly estimated tax payments to July 15, 2020. Make sure to check that the deadline for your residing state has the same deadline as the IRS. The AICPA has listed guidance for each state.
Wells Fargo, US Bank, and JPMorgan Chase have all agreed to defer mortgage payments for three months. State chartered banks and credit unions will also extend deferrals. Individuals should check with their bank or credit union to find out whether they can get a mortgage payment deferment. Banks will also defer any foreclosure sales or evictions for 60 days. Banks will also not report late payments to credit agencies. Those who are employed may still take advantage of mortgage deferrals.
Student Loan Payments (not yet law)
Payments and interest on all federal loans from U.S. Department of Education will be delayed for six months. This does not need to be requested and will be automatic. Wage garnishments, social security offsets and tax refund seizures will all be suspended during this time as well. Unfortunately, this does not extend to private loans, program federal loans or Perkins federal loans. Borrowers will still be able to make payments if they would like to. Those who are still employed and in a stable position should continue to make loan payments to pay off their student loans sooner.
We hope this post has given you some relief about the economic impact of the coronavirus pandemic.
Although the news is definitely not all good, it is not all bad either! These new rules may offer relief and alleviate your financial burden during these unprecedented times.