According to nonprofit research organization The Brookings Institution, almost 17 million people in the nation filed for unemployment between late March and mid-April 2020. And many more applied after that, with unemployment numbers rising across many states due to COVID-19. That’s just one sign that many people are struggling financially during this time, which is why the federal government passed the CARES Act.
The CARES Act is the Coronavirus Aid, Relief and Economic Security Act. It was signed into law on March 27, 2020. The stimulus law governs how more than $2 trillion in relief funds are being used to help Americans. Find out more about the CARES Act and whether you can get any help under it.
How Do I Get a Stimulus Check?
You don’t have to do anything to get your stimulus check if you qualify. The IRS will either deposit the funds into the bank account associated with your tax refund, or mail you a paper check to the address associated with your tax refund. If you didn’t get a refund electronically, you can go to the IRS’s Get My Payment site and enter your checking account information to speed up how fast you receive the money.
Stimulus funds are being paid out to any individual who filed a tax return in 2018 or 2019 and meets the following criteria:
- Made less than $99,000 annually or $198,000 annually as a married couple
- Is not listed as a dependent on someone else’s tax return for the qualifying year
- Is not under the age of 17
Individuals who receive Social Security benefits and meet the above three requirements also qualify for a stimulus check and don’t have to have filed tax returns to receive the payment.
Checks for qualified individuals making less than $75,000 or $150,000 as a married couple are $1,200 per person. That means married couples can receive up to $2,400. People who make more than those amounts but less than the cutoff for stimulus funds receive a smaller amount based on how much more they make. Checks also include an additional $500 for each dependent under age 17 for those who qualify for the stimulus payment.
Does the CARES Act Provide Mortgage Relief?
Yes, the CARES Act provides some assistance for certain American homeowners impacted by coronavirus. The relief covers federally backed mortgages but doesn’t require any relief for other types of mortgages. You still have options if your mortgage isn’t federally backed, though. Contact your lender to find out if you qualify or if they’re offering other relief programs right now.
For those who qualify, the relief comes in the form of a foreclosure moratorium and forbearance options. This means that if you can’t make your mortgage payment because of financial losses due to COVID-19, lenders of federally backed loans have accommodations to work with you.
Here are two things you can benefit from:
- These lenders can’t foreclose or take action to foreclose on qualified homes for 60 days after March 18.
- You can request a forbearance if you have pandemic-related financial hardship. That means the lender allows you to not pay your mortgage, and you won’t accrue added interest or penalties. The first forbearance period lasts 180 days, and people who are still struggling can request a second forbearance period for another 180 days.
Are There Provisions for Student Loans in the CARES Act?
The CARES Act includes some automatic relief for those with federal student loans. The relief covers any loans owned by the U.S. Department of Education but doesn’t cover private loans, FFEL loans owned by commercial lenders or Perkins Loans owned by educational institutions.
If you have a qualifying loan—you can call your lender to find out—it’s being placed in administrative forbearance and you don’t need to do anything. This means that any automatic payments or payment requirements are being suspended from March 13 through September 30, 2020. Loans won’t accrue additional interest during this time.
You won’t be penalized for not making these payments, and they’ll be tacked on as additional payments at the end of your loan term. But if you can afford to keep making your payments during this time, we recommend you do that.
If you have a student loan that isn’t owned by the Department of Education, you might have other relief options. Contact your lender as soon as you know you might not be able to make your scheduled loan payments due to coronavirus-related hardship.
Does the CARES Act Help With Credit Card Debt?
The CARES Act doesn’t provide specific relief for credit card bills or debt other than the stimulus checks, which anyone can use to help cover such bills. However, the federal government has asked lenders to work with consumers. If your lender does make an agreement with you and allows you to skip monthly payments or pay less than what you owe—and you were previously current on the account—the CARES Act requires that lenders continue to report your account as current to the credit bureaus.
How to Ask Your Lender for an Accommodation
Many credit card companies are offering different assistance options. For example, American Express notes that it might be able to work with cardholders to lower payments, provide relief for late fees or lower interest rates temporarily. For more information about what your lender can do, contact them as soon as you know you might not be able to make credit card payments.
What Benefits Does the CARES Act Give Small Businesses?
The CARES Act includes funds for several programs to assist small businesses. Whether you qualify as a small business depends on what industry you’re in and how many employees you have. CARES Act programs for small businesses include:
- The Paycheck Protection Program, which lets small businesses take out loans to cover critical expenses such as employee wages and rent. If you keep all employees on your payroll and use 75% of the funds to cover employee wages, the loan can be forgiven.
- Economic Injury Disaster Loans, which provide funding support for businesses experiencing financial hardships specifically related to the coronavirus pandemic.
Does the CARES Act Add Unemployment Benefits?
Yes, the CARES Act allows states the option of expanding unemployment benefits so they cover more people. That includes workers who aren’t normally covered as well as full-time contractors, freelancers and other self-employed individuals. Every state’s programs are unique, so contact your state to find out details and apply for benefits.
Has the CARES Act Provided Tax Relief?
Yes, the CARES Act provides a number of tax breaks and relief options for individuals and businesses. Some include:
- An extension until July 15 for filing and paying 2019 federal taxes
- Extensions for employers and self-employed individuals to pay Social Security taxes
- A temporary pause of certain collection activity related to delinquent taxes
Does the CARES Act Affect My Retirement Fund?
The CARES Act provides some temporary changes in what options you have when managing your retirement funds during 2020. Certain plans will not require minimum distributions during 2020, which can allow seniors to save their retirement funds for use later if possible and desired.
The CARES Act also provides some relief for people with retirement accounts who aren’t yet retired. Normally, if you make an early withdrawal from a qualified retirement plan, you pay a hefty tax penalty. From January 1, 2020 through December 31, 2020, however, if you make a withdrawal due to a need related to the coronavirus pandemic, those penalties are waived. Allowed amounts for loans from qualified retirement accounts have also been increased.
How to Take Advantage of the CARES Act
Protecting yourself financially during the COVID-19 pandemic requires equal parts planning and education. Reach out to lenders and other agencies to find out if you qualify for assistance under the CARES Act or their own programs. Also, make sure to keep an eye on your credit report, and be ready to dispute any incorrect items reported during this time. This will help you protect your score and your access to loans and credit now and in the future.
Above all, if you’re dealing with hardship, don’t be afraid to ask for help.
