One-Time non-taxable payment

The one-time non-taxable $1,200 in “economic relief promised by Donald Trump in his $2 trillion relief plan has requirements and stipulations.

• Single adults with Social Security numbers with an adjusted gross income of $75,000 or less get the full amount.
• Married couples with no children earning $150,000 or less will receive a total of $2,400.
• Taxpayers filing as head of household would get the full payment if they earned $112,500 or less.
• Every qualifying child, age 16 or under, will receive an additional $500.
• Payments decrease for single people earning $99,000 or married people who have no children and earn $198,000.
• A family with two children will no longer be eligible for any payments if its income surpassed $218,000.

Filing requirements:

• If you haven’t prepared a 2019 tax return, you can use your 2018 return.
• If not 2018 return filed, use a 2019 Social Security statement showing your income
• If the Internal Revenue Service has your bank account information from your 2019 or 2018 returns, it will transfer the money to you via direct deposit based on the recent income-tax figures.
• People who typically do not file a tax return must file a simple tax return to receive an economic impact payment.
  • Included among those are many low-income taxpayers, veterans, and individuals with disabilities.
• On March 30, the R.S. said on its websitethat it would build a portal where people can update their information “in the coming weeks.”
  • Presumably, people updating information on the new portal would not get the money until a few weeks after they are first able to provide their information.
• Most people get their payments by April 17.

Exceptions:

• No payment if claimed as a dependent, even adults and students.
• If you own money to the I.R.S., consult a tax professional to request an alternative payment plan or apply onlinewithout the help of a pro.

Other information:

• Individuals receiving monthly Social Security retirement and disability payments also get a stimulus payment.
• Unemployed people and Veterans also receive a stimulus payment.
• Individuals living abroad who meet the income requirement and have a social security number will also receive a stimulus payment.
• The bill temporarily suspends nearly all efforts to garnish tax refunds to repay debts, including those to the I.R.S. itself.
  • This waiver may not apply to people who are behind on child support.
• Payment will be received If your income tax refunds are being garnished because of a student loan default.

According to the bill, you will get a paper notice in the mail no later than a few weeks after your payment has disbursed.

That notice will contain information about where the payment ended up and in what form it was made.

Contact the I.R.S. if you have problems with the notice.

Unemployment Benefits

Those who are unemployed are partly unemployed or cannot work for a wide variety of coronavirus-related reasons will be more likely to receive benefits.

States decide on amounts received. States have the option of providing the entire amount in one payment or sending the extra portion separately. But it must all be done on the same weekly basis.

• Benefits expand to replace the average worker’s paycheck, explained Andrew Stettner, a senior fellow at the Century Foundation, a public policy research group. The average worker earns about $1,000 a week, and unemployment benefits often replace roughly 40 to 45 percent of that. The expansion will pay an extra amount to fill the gap.
• Under the plan, eligible workers will get an extra $600 per week on top of their state benefit.
  • But some states are more generous than others. According to the Century Foundation, the maximum weekly benefit in Alabama is $275, but it’s $450 in California and $713 in New Jersey.
  • For example, if a worker made $1,100 per week in New York, she’d be eligible for the maximum state unemployment benefit of $504 per week. Under the new expansion, she gets an additional $600 of federal pandemic unemployment compensation, for a total of $1,104, thus replacing her original paycheck.

Self-employed people are newly eligible for unemployment benefits.

• Benefit amounts will be calculated based on previous income, using a formula from the Disaster Unemployment Assistanceprogram, according to a congressional aide.
• Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.

Others eligible:

• Part-time workers are eligible for benefits.
  • The benefit amount and how long benefits will last depend on your state.
  • They are also eligible for the additional $600 weekly benefit.
• Individuals diagnosed with the virus or those experiencing symptoms or are seeking a diagnosis — and unemployed, partly unemployed or cannot work as a result are covered.
• The same goes if you must care for a member of your family or household who has received a diagnosis.
• Individuals are elidable who rely on a school, daycare, or another facility to care for a child, elderly parent, or another household member so that you can work. That facility has been shut down because of coronavirus.
• People who must self-quarantine are covered.
  • Individuals unable to get to work because of a quarantine are eligible.
• Individuals about to start a new job and cannot because of an outbreak are eligible.
  • Individuals are also covered if they were immediately laid off from a new job and did not have enough work history to qualify for benefits under normal circumstances.
  • Individuals who quit a job because of a quarantine recommended by a health care provider, or because your child’s daycare closed and you’re the primary caregiver are likely covered.
  • This provision does not cover people who quit because they fear contracting coronavirus.
• Unemployed, or partly unemployed or those individuals unable to work because an employer closed, are covered under the bill.
• Individuals relying on income from another who died from the coronavirus are covered.
• Individuals already receiving unemployment benefits for reasons unrelated to the coronavirus, will be extended by 13 weeks.
  • You will also receive the extra $600 weekly benefit from the federal government.
• If you’ve exhausted your benefits, eligible workers can generally reapply.
  • How much you get and for how long depends on the state where you worked.
  • Everyone gets at least another 13 weeks, along with the extra $600 payment through July 31.

Exceptions:

Workers who can work from home, and those receiving paid sick leave or paid family leave are not covered.

New entrants to the workforce who cannot find jobs are ineligible.

Other information:

• Many states provide 26 weeks of benefits, though some states have trimmed that back while others offer a sliding scale tied to unemployment levels.
• The bill provides eligible workers with an additional 13 weeks.
  • Participants in states with 26 weeks would be eligible for a total of 39 weeks.
  • The total amount cannot exceed 39 weeks, but it may be shorter in individual states.
• The extra $600 payment will last for up to four months, covering weeks of unemployment ending July 31.
• Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on January 27, 2020, and through December 31, 2020.
• Those eligible for benefits may claim state-level benefits retroactively, back to January 27.
  • But it will ultimately be determined by your state, which will consider the date that you became unemployed and any extenuating circumstances that prevented you from filing earlier, according to a representative for the Department of Labor.
  • The extra $600 payment is not retroactive.
    • The additional $600 benefit counts as income when determining eligibility for means-tested programs, except for Medicaid and the Children’s Health Insurance Program, known as CHIP.
  • States may waive the one-week waiting period, but it’s unclear how long it will take to process claims — especially with state offices so strained by many applications.

Student Loans

• The federal government haswaived two months of payments and interest for many federal student loan borrowers.
• Until September 30, there will be automatic payment suspensions for any student loan held by the federal government.
  • Check your account online in the coming weeks. Once logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.
• If you have a “direct loan” — in the past ten years, you’re eligible.
  • According to the Institute for College Access & Success, 90 percent of loans (in dollar terms) will be eligible.
• Older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible.
  • Nor are Perkins loans,
  • Loans from state agencies, or
  • Loans from private lenders like:
    • Discover,
    • Sallie Mae and
    • Wells Fargo.
  • The holders of those loans may offer assistance programs.
• Within a few weeks, you are supposed to receive a notice indicating what has happened with your federal loans.
  • You can choose to keep paying down your principal.
    • After August 1, you should get multiple notices letting you know about the cessation of the suspension period and that you may be eligible to enroll in an income-driven repayment plan.
  • The bill says that interest “shall not accrue” on the loan during the suspension period.
    • Note: Service errors are common.
    • Payment counts will still go up by one payment each month during the six-month suspension, even though you will not make payments.
  • The legislation suspends wage garnishment from late payments during these six months.
  • Some employers replay some parts of some student loans.
    • Between now and the end of 2020, they can offer up to $5,250 of assistance without that money counting as part of the employee’s income. If the employer pays tuition for classes an employee is taking, that money will also count toward the $5,250.

Retirement Accounts.

• For the calendar year 2020, no one will have to take a required minimum distributionfrom any individual retirement accounts or workplace retirement savings plans, like a 401(k).
• Under the I.R.A. workplace retirement plan, You can withdraw up to $100,000 this year without the usual 10 percent penalty. Doing so must be because of the outbreak.
• You can spread out any income taxes that you owe over three years from the date you took the distribution.
  • You could put the money back into the account before those three years are up, even though the rules may typically keep you from contributing.
  • This exception applies only to coronavirus-related withdrawals.
    • If you tested positive, a spouse or dependent did, or you experienced a variety of other negative economic consequences related to the pandemic.
    • Employers can allow workers to self-certify that they are qualified to pull money from a workplace retirement account.
  • You can borrow from a 401 (K) or other workplace retirement plan up to twice the usual amount.
  • For 180 days after the bill passes, with certification that you’ve been affected by the pandemic, you’ll be able to take out a loan of up to $100,000.
    • Usually, you can’t take out more than half your balance, but that rule is suspended.
    • If you already have a loan and were supposed to finish repaying it before December 31, you get an extra year.

Charitable Contributions

• The bill makes a new deduction available — and not just for 2020 — for up to $300 in annual charitable contributions.
  • It’s available only to people who don’t itemize their deductions, and
  • You calculate this new one by subtracting the amount you give from your gross income.
  • You qualify if you give cash to a qualified charity and not to a donor-advised fund.
    • A donor-advised fund is one in which people bunch contributions in a particular year to maximize deductions.
    • If you’ve already given money since January 1, that contribution counts toward the $300 cap.
  • The bill allows donors to deduct 100 percent of their gift against their 2020 adjusted gross income. If you have $1 million of income, you can give $1 million to a public charity and deduct the full amount in 2020.
    • The new deduction is only for cash gifts that go to a public charity.
      • If you give cash to a private foundation, the old deduction rules apply.
      • And while the organizations that manage donor-advised funds are public charities, you do not get the higher deduction for donating cash to your donor-advised fund.

Other Features of the Bill

• The bill states that during the period beginning on January 31 and continuing 120 days after the end of the national emergency declaration, lenders and others should mark your credit file as current, even if you take advantage of payment modifications.
  • If you had black marks in your file before the virus hit, those would remain unless you fix the issues during the emergency period.
  • Be sure to check your credit report a few times each year, mainly if you accept any help from any financial institution or biller this year.
• For 120days, the bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac, and other federal entities. Landlords cannot add fees or penalties for nonpayment of rent.
• Everyone must have a valid Social Security number to be eligible. There is an exception for members of the military. You can find your adjusted gross income on Line 8b of the 2019 1040 federal tax return.