A COMPREHENSIVE GUIDE TO COVID-19 FINANCIAL AID OPPORTUNITIES

$2.2 TRILLION STIMULUS FOR INDIVIDUALS AND SMALL BUSINESSES 

1. Checks for US residents. This will benefit most Americans and provide some desperately needed financial relief in the short term. As long as you filed a tax return in 2018 or 2019 and have adjusted gross income below $75,000 ($150,000 for couples), you will receive a check for $1,200.00 ($2,400.00 if you are married) via direct deposit or regular mail. This money is aimed at helping with short-term cash flow due to the shutdown of businesses, or if you were laid off or lost your job because of COVID-19. It’s a quick shot in the arm that will greatly benefit younger families with children, since those who qualify will also be eligible for another $500 per child. The Treasury is ramping up to start processing the payments within the next three weeks.

2. Expanded unemployment benefits for those laid off or furloughed due to mandatory business closures. The CARES Act greatly expands unemployment insurance (UI) for workers, including a $600 per week increase in benefits for up to four months and federal funding of UI benefits provided to those not usually eligible for UI, such as the self-employed (solo or small business owners), including those who have been furloughed (still technically employed, but can’t work, including freelancers, Uber drivers, and other gig workers). Even if you were unemployed before the outbreak, you are still eligible to receive increased benefits. This will mean greater security for many small business owners who are the backbone of the American economy.

3. Emergency loans to state and local governments. Nearly $500 billion allocated by CARES to state and local governments helps to ensure that payments on municipal bonds (a significant asset class of investors’ portfolios) won’t be endangered. It also means that at a time when local governments are losing revenue because businesses are being shut down, the public services (electricity, water, etc.) that we all rely on can continue without being curtailed.

4. Help for small businesses. The CARES Act will provide loans to small business owners to help keep people on their payrolls (for at least four months), and the loans can be forgiven. Small businesses will have access to $350 billion allocated to help them get through this crisis without closing their doors or laying off all their workers. They’ll also be able to receive a refundable tax credit of up to $5,000 per employee and deferment of payroll taxes.

5. No RMDs for 2020. As part of the relief package, much like in 2008 and 2009, if you are currently taking RMDs from your IRAs or other retirement accounts, you will have the option to skip it in 2020. If you need to take your distribution, of course, you still can, but it’s great to have that flexibility under these extraordinary circumstances. Additionally, the CARES Act relaxes the rules on emergency withdrawals from retirement accounts if you are under 59 ½. Those who need to access money in a 401(k) or IRA to stay afloat during the crisis will not have to pay the 10% penalties on the withdrawal. However, taxes will still be due, so use this only as a last resort! Also, repayment of these distributions may be included in taxable income over a three-year period.

6. Loan changes from retirement plans. Plan loan dollar limits will be temporarily increased to the lesser of $100,000 or 100% of the participant’s vested balance (applies to loans taken within 180 days of the enactment).  There is a one-year delay for loan repayments due in 2020 with subsequent payments adjusted to take into account the delay. Loan durations (including the 5-year maximum) may also be disregarded during this period, if payments are delayed.

The list above includes just some of the highlights of the legislation.  For more details, you may go https://www.congress.gov/bill/116th-congress/senate-bill/3548/text.

FAMILIES FIRST CORONAVIRUS RESPONSE ACT

The Act’s provisions related to paid family and sick leave are scheduled to go into effect on April 1, will sunset on December 31, and will affect all employers with less than 500 employees, with certain exemptions for healthcare providers, first responders, and businesses with less than fifty employees that will potentially be unviable due to the expanded leave requirements. The Act contemplates that all paid sick and family leave paid to employees under its provisions will be recouped through a payroll tax credit for employers against the employer portion of Social Security and Medicare taxes. In addition to tax credits for paid sick and family leave, the Act also provides for tax credits against any amounts paid by the employer to maintain health insurance on employees taking leave under the Act. Self-employed individuals are also eligible for self-employment tax credits for days they are unable to perform services due to the same qualifying reasons employees are permitted to take paid family and sick leave.

Under the Act, employers are required to provide up to two weeks of paid sick leave, which can be used in addition to or before any PTO, for an employee that is unable to work due to:

• Sickness from Covid-19;

• A quarantine or isolation order from a doctor or local, state, or federal government;

• Providing care for a person subject to such a quarantine or isolation order; or

• Providing care for a child due to the closure of a school or childcare provider.

Such leave is required to be paid at the employee’s full rate of pay, subject to a maximum of $511 per day or $5,110 in the aggregate, for reasons (1) and (2) above, or 2/3 of the employee’s regular rate of pay for reasons (3) and (4) above, subject to a maximum of $200 per day or $2,000 in the aggregate.  Employers are also required to provide paid family leave for a total of twelve weeks, the last ten weeks of which is required to be paid at 2/3 of the employee’s normal rate of pay or a maximum of $200 a day or $10,000 in the aggregate. An employee is eligible for paid family leave due to caring for a child whose school or daycare is closed due to the outbreak. Employees that take paid family leave or sick leave are protected from retaliation or discrimination due to the use of the leave. Employers are required to post a notice published by the Department of Labor which can be found at: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave