The stimulus package to deal with the impact of coronavirus was released last week and $2.2 trillion in economic relief is on the way. Now that we’ve had a chance to digest it (883 pages!), let’s look at some of the major aspects of the package and provide some thoughts and links for you to learn more about each.
Are you getting money?
Most Americans will be in the form of a tax credit. Adults will be eligible for $1200 ($2400 for couples) with an additional $500 per child under 17. There are phase outs that start at certain income levels, but you can calculate what you will be entitled to below:
This is based on your 2019 Adjusted Gross Income but will use your 2018 AGI if you haven’t filed your 2019 taxes yet.
Update – the IRS link to status your payment and update your bank information is here.
Do you need to do anything to get the tax credit?
Probably not unless you have outdated information on your latest tax return. If the IRS has your bank information to send your refund or e-pay your taxes then they’ll use that information to send your payment. If you don’t, they will send the check to your last address of record. Payments to direct deposit accounts are supposed to start next week. More to come on when physical checks will be sent and how to update your new address and/or banking information.
Did you get laid off or furloughed?
The bill expanded eligibility for unemployment benefits and ended up increasing payments by an additional $600 per week. The benefits period was also extended an additional 13 weeks. Each benefit period and amount will vary by state, but you can learn more about what your state offers and apply here.
Do you need to tap investment accounts for emergency cash?
- If you’re under 59 1/2 years old, you are now able to withdraw up to $100,000 out of your Traditional IRA account without being subject to the 10% penalty.
- You’ll still have to pay taxes on the distribution as income, but they can now be spread out over 3 years.
- Loans from 401(k)’s have also been increased to $100,000.
Also of note on retirement accounts – those that are over 72 and subject to taking Required Minimum Distributions are not required to do so this year. Lastly, the deadline to contribute to your IRA contributions have been extended to July 15, 2020
Are you a business owner?
You have 2 programs available for to you to access through the bill:
SBA Economic Injury Disaster Loan Program
This program allows you recieve a $10,000 cash advance for businesses that suffered economic injury which is essentially a grant. According to the program FAQ, “the advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.” You can also apply for additional loans through the program with more traditional payback periods and a 3.75% interest rate.
You can apply for the EIDL loan here.
Paycheck Protection Program
You can apply for an SBA loan with the loan becoming forgivable if you keep employees on your payroll for 8 weeks and the money is used for payroll, rent, mortgage interest, or utilities. The total loan amount available to you is based on your average monthly payroll cost and your maximum loan amount you would receive is equal to 250% of that number.
The some of the details of the program were still being worked out as of its release on Friday and to be expected, the roll out was not smooth. I heard multiple stories of broken application links, long hold times, and flat out refusal by some banks to even participate. Your best bet is to start with your local business bank to see if they are participating in the program. If they aren’t ready to or not participating, you can try the list of active SBA lenders here.
You can apply to both programs but there are some restrictions. You can learn more about those and all of your additional questions here.
There are plenty of additional provisions in the bill including suspending student loan payments, mortgage relief, and others. Please reach out to me if you have any questions. Good luck and stay safe everyone.