Plan Your Finances with the CARES Act
We’re in one of these historic moments:
- Where were you when JFK was assassinated?
- Where were you during 9/11?
- What did you do during coronavirus?
We’re in the beginning stages of novel COVID-19’s disruption. The human toll of this pandemic will devastate many households across the globe, and it’s incredible to see many people go to war to fight this virus. Thank you to all of our medical professionals, including my own wife who works in the Cheyenne Emergency Room. The world will come together to combat this silent enemy in the medical arena.
The economic health of our world also needs assistance. This war feels different, but it’s also important. On this side of the COVID-19 war, the United States government has fired an arrow.
An arrow that has twelve zeros attached to it.
The CARES Act and You
Two trillion dollars were included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The U.S. Government will distribute these funds to small businesses, the healthcare system, large companies, and taxpayers as we work to lessen COVID-19’s economic impact. Luckily, we live in a country that has the means to do something like this.
Our company serves individuals and families, so we’ll skew the rest of this article toward relevant information for readers like you.
Updates to this environment are constantly evolving, so we encourage you to stay informed by visiting sites like the IRS website and other relevant resources for your unique situation.
Payments to Households
This part of the CARES Act impacts over 90% of American households. Taxpayers filing single will be eligible to receive $1,200 if they have $75,000 or less in 2019 or 2018 adjusted gross income (AGI) and will receive lesser amounts if they earn up to $99,000 AGI. Take these amounts and double them for married filing jointly households. This means $2,400 for a household making $150,000 and a phase out up to $198,000.
Families with kids under the age of 17 will also receive $500 for each child.
For more guidance on this evolving story, please visit this IRS Website: Economic Impact Payments – What You Need to Know.
Millions of people lost their income sources with this historic event. This led the government to make temporary changes to the unemployment compensation program. Unemployed individuals will be able to receive compensation for 13 weeks, and the benefit amount has increased by $600 a week.
One of the major changes to this program for this pandemic is that self-employed individuals and “gig” workers are allowed to take advantage of this social insurance program.
► Tax filing date and payments are now due July 15, 2020. However, the majority of taxpayers are eligible for a refund, so we recommend filing sooner than later.
► The 10% penalty for early withdrawal from retirement accounts has been suspended. You can spread the taxable income over three years while also having the opportunity to recontribute the amount withdrawn.
► Student Loan Provisions: Federal student loan payments have been deferred through September 30, 2020. Employers can make student loan payments for employees that wouldn’t be classified as income.
► Also, if you’re interested in how the CARES Act influences planning for small business owners, please see this resource: Supporting Small Businesses.
How To Spend Your Economic Impact Payment
1. First off, use this money to keep your life afloat by paying your bills and taking care of your health.
2. Stash this money in your emergency fund so the cash is available when you need it.
3. You may want to proactively prepare for health expenses. If you already have your emergency fund in place, consider putting this money into a health savings account if you’re eligible.
4. Support others in your community and/or your local economy to keep the economy in motion.
Other Opportunities to Empower Your Financial Plan
Think of what you can control during these uncertain times. You can’t control the financial markets. You can’t control the global economy. However, you can work on your personal economy during this time. Here are a few ideas for you to consider:
► Revisit your investment plan using some strategies.
► Analyze your spending patterns for the short term and the long term.
- Negotiate recurring payments (rent, mortgage, utilities, debt, etc.).
- Many institutions and landlords are extending relief programs, so look at your common expenses to see if you’re eligible for any breaks and/or discounts.
► Discuss money topics with family members.
- Don’t let money be a taboo subject within your household.
- Have honest conversations with your loved one(s) about money, your budget, your goals, and any other relevant money topic.
► Enroll in health insurance via marketplaces.
- As of writing, Colorado’s Connect for Health is allowing individuals to enroll in health plans through April 3.
Help In Other Ways
From a top-down approach, the United States government aims to help people, the healthcare system, and businesses through the CARES Act. From a bottom-up approach, you may have the opportunity to assist during this historic period. Below are some recommendations to get out there and help people if you’re able:
- If you’re a healthcare worker, take care of yourself so you can take care of us.
- Donate medical supplies in your household.
- Donate food supplies to your local food bank.
- Give blood.
- Volunteer with your local Meals on Wheels.
- Check in on your neighbors who are affected by COVID-19, under quarantine, and/or elderly.
- Find other economic ways to support charitable organizations, local businesses, people struggling, and humanity overall.
The Beginning, the Middle, and the End
The story of this historic event will have a beginning, a middle, and an end. We experienced the beginning of COVID-19’s impact on the world. Now we’re in the middle of this story where the next few weeks and months will likely be rough on everyone. But remember, we’ll soon be on the other side of this event. The timetable is uncertain but, someday, we’ll ask each other:
- What did you do during coronavirus?
Many people will recover, businesses will reopen, and you won’t second guess high-fiving a stranger. This too shall pass, and we hope the end of this story will come soon. The key now is to stay well, make good choices, and help each other. And by helping each other, you’ll likely gain a sense of empowerment and control during this historic event.
We wish to do our part in social distancing, so we can’t give you a physical high five yet. But hopefully soon. For now, we gladly extend you a virtual high five!
If you have financial questions or concerns, feel free to try the chat feature at the lower-left corner of this page.