Breaking down the CARES Act

Updates and FAQ's

As more information becomes available we will continue to share it with you. The Government and the Fed have continued to take steps to help mitigate the economic repercussions that could result from this global pandemic. The CARES Act is one of those measures that passed last week to help individuals and businesses. We believe there will be more actions taken as we are encouraged to stay home. Below you will find some pertinent information that may benefit you at this time.

LUMP SUM PAYMENT:

  • The package includes direct payments of $1,200 per adult and $2,400 per couple

  • If you have children, your payment will increase by $500 per child. However, payments could be reduced if you have adjusted gross income over a certain threshold. The thresholds are:

    • $75,000 for single filers.

    • $112,500 for single heads of household.

    • $150,000 for married couples filing jointly.
       

(For example, say you are a family of four and your adjusted gross income in 2019 was $135,000 - assuming you filed your 2019 tax return — the IRS will use your 2018 tax return if you have not yet filed this year - You qualify for a payment of $3,400: $2,400 as a couple + $500 times two for each dependent child)

So how can you get the $1,200 per person+ the $500 per child?    Our understanding is that if you file your taxes and pay with your checking account online, they will deposit it in your checking account electronically. Or they will mail a check to you. 

**New information released, states that individuals should receive their funds by Wednesday, April 15th, 2020. 

UNEMPLOYMENT BENEFITS:

  • The plan wraps in far more workers than are usually eligible for unemployment benefits, including self-employed people and part-time workers

  • 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

  • How much will I receive? It depends on your state

  • Benefits will be expanded in an attempt to replace the average - 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.

So How to I apply for Unemployment?    The Minnesota Unemployment office is open from 6am to 8pm, Sunday to Friday. On the Minnesota Unemployment insurance website, there is more detailed information on the application process and when you can expect to receive your payments.

This is a link to there website where you can apply online. 

  • Twin Cities area: 651-296-3644

  • Greater Minnesota: 1-877-898-9090

  • TTY (for the hearing impaired): 1-866-814-1252

 

BUSINESS LOANS:

  • Generally, the plan will provide $350 billion in federally guaranteed loans to businesses with 500 or fewer employees

  • This program is available to sole proprietors and self-employed individuals, too

  • The Small Business Administration will oversee this Paycheck Protection Program, which will distribute the loans via banks to small businesses

  • The plan provides an expedited origination process and loans will be available during an emergency period ending June 30

  • All or a portion of the loan can be forgiven, based on a formula related to the percentage of employees the employer keeps on the payroll

  • Each business can receive a loan up to $10 million. The actual amount is related to your payroll costs tested over different time periods

  • The loans have an interest rate cap of 4 percent.

I am a Small Business Owner being impacted by the coronavirus, how do I apply for these loans?       Here is a link to the SBA and their relief programs. 

 

RETIREMENT ACCOUNTS:

  • The law will waive the current 10 percent penalty on early withdrawals from IRAs and qualified plans for people who have been impacted by the coronavirus. In addition, it increases the ceiling on loans (401k loans i.e.) against a qualified plan to $100,000

  • This no-penalty withdrawal applies to those who have been diagnosed with COVID-19 or have experienced financial hardship from being quarantined, laid off or furloughed, or having their hours reduced between now and the end of the year

  • Distributions will still be included in gross income and subject to regular income tax, but you can spread the amount of tax you will owe over a three-year period

  • Distributions also may be re-contributed within three years of withdrawal

  • While this opens up a source of funding for many people, this might be considered as a last resort

REQUIRED MINIMUM DISTRIBUTIONS (RMDs):

  • If you are subject to RMDs, you are not being required to take them out in 2020.

STUDENT LOANS (Through September 30, 2020):

  • No federal student loan payment;

  • No interest on your federal student loan payments

    How do I put my student loan payments on Hold? Our understanding is that you should not have to do anything. If you are signed up with auto-pay, those payments should automatically stop. If you pay through a bank bill-pay, you may want to log into the bank's website and put your next payment off until after September 30th.