As individuals and families continue to suffer during the coronavirus pandemic, many households are running low on funds, and financial stress has been building over the past few weeks. The CARES Act, which was signed on March 27, 2020 provides several options to help.
1. Individuals may be eligible to receive a stimulus check for $1,200 ($2,400 for married couples) plus $500 for each dependent child under the age of 17. However, the amounts will phase down if adjusted gross income on your 2019 tax return (2018 if you haven’t filed yet this year) is between $75,000 – $99,000 and nothing will be received if income is over that range. If married, the range is $150,000 – $198,000. Link to calculate your stimulus amount: https://www.washingtonpost.com/graphics/business/coronavirus-stimulus-check-calculator/
2. To protect homeowners, two mortgage relief items were implemented: foreclosure moratorium and right to forbearance. The moratorium prevents loan servicers of federally backed mortgages from foreclosing on your home for 60 days from March 18th, plus an additional 180-day extension can be requested. The forbearance allows for the loan provider to pause payments for up to one year. It is important to call you lender to learn the options available.
3. Most student loans have suspended payments until September 30th without accruing interest. The Department of Education is also allowing refunds for payments made between March 13th – March 27th. Additionally, payments made between now and September 30th can go entirely against the loan balance, which can significantly cut down on the overall payback time. You should contact your provider for more information specific to your loan.
4. Normally early withdrawals from retirement accounts have a 10% penalty, however this penalty is removed for those affected by coronavirus-related hardships up to $100,000. The amounts will still be subject to normal tax rates, but can be spread out over a three-year period. Additionally, amounts paid back during that timeframe won’t be taxed and taxes previously paid can be recouped. It is still recommended to use this as a last resort, and a six-month budget should be considered before accessing these funds.
As we continue to learn more about the new and existing programs aimed to assist those in need, we will be updating our social media pages and website with articles and links. If you want more information on COVID 19 relief or need help with tax preparation, contact our tax professionals at The Innovative CPA Group at 203-489-0612. Or contact us online.