Over the weekend, President Donald Trump signed a $2 trillion economic relief plan set to provide aid to millions of Americans impacted by the COVID-19 (Coronavirus) pandemic. The package includes stimulus payments for individuals, additional unemployment coverage, student loan relief, and more.
But, what does that mean for you?
Most adults will receive a check or direct deposit. The amount will vary based on adjusted gross income, filing status, and the number of dependents you claim. The amounts will break down as follows:
- Single adults who made $75,000 or less annually will receive $1,200. If you have qualifying children 16 or under, you will receive an additional $500 per child.
- Married couples with no children who made $150,000 or less will receive $2,400.
- Taxpayers who file as the head of household will get the full payment if they earned $112,500 or less.
- For single adults who make more than $75,000, the payment gradually decreases until it stops all together at $99,000.
- For married people with no children who make more than $150,000, the stimulus payment gradually decreases until it stops all together at $198,000.
If someone claims you as a dependent – even as an adult – you will not eligible for a relief payment. To see your adjusted gross income, look at Line 8B on your 2019 1040 federal tax return.
Most people will receive their payments within three weeks. However, according to the bill, you’ll receive a paper notice in the mail a few weeks after your payment has been distributed. That notice will also contain information about where the payment ended up and in what form it was made.
Additional Unemployment Coverage
Under the stimulus package, additional unemployment benefits will be extended to people who wouldn’t typically be eligible for unemployment.
Typically, self-employed and part-time workers, gig workers, freelancers and independent contractors aren’t eligible for unemployment benefits, but under the stimulus package, those groups will be protected. Benefits will be calculated based on previous income using a formula from the Disaster Unemployment Assistance program.
Under the plan, eligible workers will get an extra $600 per week in addition to the state unemployment they are currently receiving. The state unemployment and extra coverage is designed to replace the paycheck that has been lost due to Coronavirus (COVID-19).
Student Loan Relief
The federal government has already waived two months of interest and payments for student borrowers. There will be an automatic payment suspension until Aug. 30 for any student loans held by the federal government. Older Federal Family Educational Loans, Perkins loans or loans from state or private agencies are not eligible. However, if you have a private student loan, it’s worth asking to see what options are available to you.
The stimulus package has also suspended certain retirement account rules for the calendar year 2020. No one will have to take a required minimum distribution from individual retirement accounts or workplace retirement savings plans.
If you have an IRA or workplace retirement plan, you can withdraw up to $100,000 without the usual 10 percent penalty as long as the withdrawal is because of the COVID-19 outbreak. The withdrawal qualifies if you, a spouse or dependent tested positive for the virus or you experienced other negative economic effects related to the pandemic. You’ll also be able to spread out any income taxes you owe as a result over a three-year time period from the date of the distribution.
You can also borrow from your 401(k) and can take out twice the usual amount. For 180 days after the bill passes, if you provide certification that you’ve been affected by the COVID-19 pandemic, you can withdraw up to $100,000. If you already have a loan and it’s supposed to be repaid before Dec. 31, you get an extra year.
We’re facing unprecedented times; the pandemic has touched everyone’s lives in some way. Please know, Palmetto First is here for you during this time. If you’re experiencing financial hardship due to the Coronavirus pandemic, reach out and talk to us. Let us help you find the option that works best for you. We can get through this together; one step at a time.