Big Relief--What the CARES Act Means for You (Part 1 of 3: Individuals) by Matthew Nee
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) is now law and will start pumping $2.2 Trillion into our economy mostly through individuals and small businesses, the backbone of our economy. $2.2 Trillion—that is a surreal number. To put it into context, our national GDP is about $22 Trillion. Further, if you spent $1,000,000 per day every day of your life, it would take you about 6,000 years (should you live that long!) to spend $2.2 Trillion. This is a big relief package.
We’ve all wondered how laid-off workers and the local “mom and pop” stores are going to survive weeks or months with severely reduced, or non-existent, income. Well, the CARES Act is part of the answer. Here are the more impactful
ways the CARES Act will help individuals.
In our next blog, we’ll cover how it will help small business and, after that, we’ll look at the impact on charities. For deeper analysis, you may call 440-793-7720 or write www.neelawfirm.com to Nee Law Firm.
Cash in hand: If your 2018 or 2019 annual individual income is up to $75,000 (or $150,000 for married couples), you may receive a one-time direct deposit of up to $1,200 per person, plus $500 per child. The relief reduces at higher income levels and disappears entirely at $99,000 (individual) and $198,000 (married).
Unemployment: Unemployment benefits are greatly enhanced: eligibility is expanded; workers may receive $600 per week on top of their normal eligibility; and the benefit period is extended until December 31. Even if you’re self-employed or an independent contractor, you may be eligible.
Retirement: The 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes is waived, retroactive to Jan. 1. The withdrawals may be taxable though. So check with a tax professional before you make a withdrawal. The 401(k) loan limit is increased from $50,000 to $100,000, and IRA and 401(k) Required Minimum Distributions (starting at age 72) are suspended.
Charity. 2020 charitable contributions up to $300 are deductible “above the line,” meaning they will be a factor in lowering Adjusted Gross Income (AGI)—the starting point for determining tax liability.
Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.
If you have any questions about the CARES Act or any other matter, please contact us www.neelawfirm.com.
Nee Law Firm remains here to help.