Today, the House of Representatives is poised to pass the final version of a historic $2 trillion bill, the latest in a series of government actions designed to help the nation overcome and recover from the coronavirus pandemic.
The House vote will follow the Senate’s unanimous passage of the 880-page bill late Wednesday night, and is the final step before the legislation reaches President Donald Trump, who is expected to sign it into law.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, offers aid for seemingly every group affected by the coronavirus crisis — from health care workers on the front lines to workers who have been laid off and businesses that are struggling due to the economic slowdown.
But the bill is perhaps best known for one of the ways it intends to help the average American: putting cash in hand.
The payment that a vast majority of Americans will receive from Uncle Sam is not the only way the legislation stands to help you directly, though. What follows is a look at several ways that the CARES Act could benefit you financially if — as expected — it’s enacted into law.
1. ‘Recovery rebates’
All U.S. residents will receive what the bill calls a “recovery rebate” if their income is under a certain threshold, they are not a dependent of another taxpayer and they have a work-eligible Social Security number.
This payment is $1,200 per person plus $500 per child for taxpayers with an adjusted gross income (which is found on your tax return) of up to $75,000. For people whose tax-filing status is head of household, the ceiling is $112,500. For married couples who file a joint return, it’s $150,000.
For taxpayers with higher incomes, the rebate will be reduced by $5 for every $100 by which their income exceeds the $75,000, $112,500 or $150,000 thresholds.
That means taxpayers will not receive any rebate if their adjusted gross income exceeds $99,000, or $146,500 for head-of-household filers with one child, or $198,000 for joint filers with no children.
Wondering what to do with your rebate? Check out “6 Smart Ways to Spend the Check Uncle Sam Is Sending You.”
2. Expanded unemployment benefits
Should you lose your job due to the coronavirus crisis, the CARES Act will likely help you financially. For example, it:
- Creates a temporary “Pandemic Unemployment Assistance” program through the end of 2020 for workers who typically are not eligible for unemployment benefits but are unable to work due to the coronavirus crisis. Such workers include the self-employed and independent contractors.
- Provides a payment of an extra $600 per week to people who use unemployment insurance or Pandemic Unemployment Assistance, for up to four months.
- Provides an extra 13 weeks of unemployment benefits through the end of 2020 for unemployed people who have yet to find a new job by the time their state-provided unemployment benefits end.
3. Required minimum distribution waiver
If you’ll be 72 or older as of this year and you have a retirement account, you are likely subject to required minimum distributions (RMDs). That’s a nice way of saying Uncle Sam will likely force you to withdraw a minimum amount of money from your retirement accounts each year so he can collect taxes on that income.
You won’t have to worry about RMDs this year, however: The CARES Act waives them for 2020.
That means retirees who have seen their retirement account balances plunge due to the recent economic slowdown — or might see their balances plunge if we enter a recession or depression — will not have to withdraw retirement funds at a low point for their investments. Instead, retirees’ balances will have another year to (hopefully) recover before they take their RMD for 2021.
4. A charitable tax write-off
To encourage Americans to donate money to charity this year, the CARES Act effectively allows taxpayers to deduct up to $300 in monetary donations on their tax return for 2020. This write-off is available to taxpayers regardless of whether they itemize their deductions or choose to take the standard deduction for 2020.
5. Student loan repayment assistance
If you have federally owned student loans, you will be able to defer payments for six months, through the end of September — penalty-free. This applies to both the principal and interest you owe on such loans.
Your employer might also help you repay your loans. The CARES Act allows employers to offer a student loan repayment benefit to employees on a tax-free basis. Under this provision, employers can contribute up to $5,250 toward an employee’s student loans or educational expenses like tuition and books this year.
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