What Individuals Should Know About the CARES Act
The CARES Act is short for the Coronavirus Aid, Relief, and Economic Security Act and is essentially a stimulus package to help individuals, families, and small businesses through these uncertain times. This act has brought about numerous changes, keep reading to see how these changes could benefit you!
CARES Act: Benefits for Individuals
The CARES Act modified the Unemployment Insurance norm to now include individuals that typically would not be eligible for unemployment benefits. There is also an extra $600 per week increase in the benefit amount, and this extra benefit will last until July 31st. Lastly, you can now continue your base benefit amount for up to 39 weeks, instead of the typical 26 weeks. Keep in mind that you file for unemployment based on your state, so you can visit your state unemployment website for more information on what your base benefit might look like!
The act provides that over-the counter (OTC) medications and menstrual care products are now considered qualified medical expenses for medical savings accounts, like health savings accounts (HSAs) and flexible spending accounts (FSAs).
Retirement Plans, Distributions, and Contributions
- A coronavirus-related distribution of up to $100,000 can be made from IRAs, employer-sponsored retirement plans, or a mix of both by an individual impacted by the coronavirus. These withdrawals avoid the 10% early distribution penalty tax that those under age 59 ½ would typically face.
- The limit on the loan amount you can take from an employer-sponsored retirement plan (such as a 401(k) or 403(b)) has been raised to be 100% of the vested account balance, up to $100,000.
- Required Minimum Distributions (RMDs) have been waived for the 2020 calendar year for qualified account holders, including IRAs.
- For 2020, cash charitable contributions can be deducted up to 100% of adjusted gross income (AGI). The act also provides for a new above-the-line deduction of up to $300, for taxpayers that cannot itemize deductions.
Homeowners and Renters
- If your mortgage is backed by the federal government, you can now suspend mortgage payments for up to 12 months. To request this forbearance, you will want to contract your mortgage company. You will likely have to confirm that you are experiencing hardships during the COVID-19 pandemic, but no further documentation should be required.
- The act also places a federal moratorium on eviction of tenants for non-payment of rent. This also prohibits landlords from charging fees or penalty charges to the tenant related to the nonpayment of rent.
Relief for Student Loan Borrowers
- Required payments on federal student loans have been suspended through September 30th, 2020. Throughout this time, no interest will accrue on this debt.
We know this is a lot of information to digest, and it can be hard to understand how specific provisions of the CARES Act can benefit and impact you specifically. If you would like to discuss your specific situation and how you can take advantage of these resources, please reach out to us at firstname.lastname@example.org.