The Coronavirus Aid, Relief, and Economic Security Act or CARES Act was just recently passed and the new law will impact just about every American.
But do you know how it will affect you?
On this episode of The Financial Symmetry Show, Grayson Blazek joins us to give you some actionable information that you can use to help you consider how best to take control of this challenging financial situation. During this stressful time, it will be helpful to learn as much as you can to give you a feeling of empowerment.
Who is eligible for the recovery rebate?
The most discussed part of the CARES Act is the recovery rebate. The full rebate is eligible for taxpayers that have an Adjusted Gross Income of $150,000 or less when filing jointly with their spouse or $75,000 for single filers. If your income is higher than that, you can use a calculator discover how much you will receive.
The full rebate is a one-time payment of $1200 per adult and $500 per qualifying child. The recovery rebate will be directly deposited into the bank account listed on your most recent tax return. Listen to this episode to hear planning opportunities around the appropriate timing if you should file your taxes right away or if it would be best for you to wait a bit longer.
Chad also joined WRAL to discuss some ideas to consider when you receive your stimulus deposits.
What happens if you or your income is impacted directly by Coronavirus?
If you have been impacted directly from the Coronavirus directly or if you have experienced lost wages then you will be able to pull funds out of your retirement accounts in the year 2020 without the usual 10% early withdrawal penalty. These funds will still be taxed, but you can spread the tax burden over a period of 3 years if needed. The CARES Act also changes the maximum 401K loan limit from $50,000 to $100,000. You’ll want to carefully consider before taking the full loan amount.
What else did the CARES Act change?
There were several other changes that should be noted as well.
- No RMD’s in 2020. The CARES Act waived the required minimum distributions for the year 2020.
- You can take an above the line deduction of up to $300 for charitable giving. To encourage citizens to continue supporting their favorite charities during this crisis the law has created this deduction for one time charitable giving.
- Federal student loans have been suspended until September 2020. This is only for federal student loans, but this was designed to help people free up their cash flow.
- There has been an increase in unemployment benefits in both the maximum amount of money you can receive and the amount of time that you can receive it.
- If you have a federally backed mortgage you can extend your loan by up to 6 months.
How did healthcare change with the CARES Act?
This landmark legislation doesn’t only affect retirement, the CARES Act also ensures that your health insurance will cover any COVID testing or potential vaccines that are developed. It also expanded qualified medical expenses for HSA’s.
What will be the biggest change brought to you by the CARES Act?
Outline of This Episode
- [1:27] Who qualifies for the recovery rebate?
- [8:18] What happens if your income is impacted directly by Coronavirus
- [13:12] What has changed with RMD’s?
- [14:30] Qualified charitable contributions have changed
- [17:38] Federal student loans have been suspended until September 2020
- [20:11] Increase in unemployment
- [23:44] Will your mortgage payment be delayed?
- [26:52] What changed in health care?
Resources & People Mentioned
Connect with Grayson Blazek
Connect With Chad and Mike
- Connect on Twitter @csmithraleigh@TeamFSINC
- Follow Financial Symmetry on Facebook