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How the CARES Act Can Help You

Congress just passed the $2 trillion Coronavirus Aid, Relief and Economic Security Act. It’s providing money to millions of American families and small businesses struggling with the COVID-19 crisis.

Here are the key features of the CARES Act and how it may benefit you:

Payments to American Households

Timing: Checks will be distributed from April 15 to May 31


Single adults with income of up to $99,000 will receive a check.

Married couples with combined income up to $198,000 will receive a check.

You will receive a check even if your income comes solely from Social Security.

“Income” is based on your most recently filed tax return (whether 2018 or 2019).

You will receive this payment even if you don’t (and aren’t required to) file tax returns.


Child Care Payments

You will receive $500 for each child in your household who is age 16 or younger. (You’ll get less per

child if your income exceeds the thresholds noted above.)


Unemployment Insurance Payments

  • If you file for unemployment insurance compensation, you will receive $600 per week more than your state unemployment program would have otherwise provided, and you’ll receive this additional weekly amount until July 31.
  • Unemployment benefits will be paid for 13 weeks longer than otherwise provided by your state unemployment program, through Dec. 31.

Health Care


  • COVID-19 tests and vaccines will be provided for free.
  • The reduction in Medicare reimbursement imposed by the Budget Control Act of 2011 is suspended from May 1 through Dec. 31.
  • The law creates a new 20 percent Medicare add-on payment for treating patients admitted to a hospital with COVID-19.
  • Medicare telehealth services are being broadened, so you can get medical advice while staying home.
  • More diagnostic tests and preventive services will be covered by insurance.
  • If you itemize deductions on your tax return, all of your cash donations are deductible, up to 100 percent of your Adjusted Gross Income, to charities that are designated as 501(c)(3) organizations.
  • If you use the standard deduction on your tax return, you can deduct up to $300 in cash donations to qualified charities.
    • Students unemployed due to COVID-19 may be able to continue receiving work-study payments from their institutions.
  • You can get a disaster loan and grant of $10,000 to pay for capital expenses.
    • This grant does not need to be repaid.
  • If the SBA does not forgive the loan, you can defer paying your share of payroll taxes for 2020. Half of what you owe is due Dec. 31, 2021; the other half is due Dec. 31, 2022.
  • The act increases the deductibility of business interest expense for 2019 and 2020 to 50 percent of Adjusted Gross Income.
    • Self-employed individuals are eligible for up to 39 weeks of unemployment compensation, through Dec. 31.

Retirement Accounts


Required Minimum Distributions are waived in 2020 for all retirement accounts and individual retirement accounts, including inherited IRAs.

  • Please contact your tax advisor if you’ve already made your RMD in 2020 because you may be able to return to your account any amounts you already withdrew.
    • You also might be able to reclassify your withdrawals as special coronavirus retirement distributions (see next item).
    • Be diagnosed with COVID-19 using a test approved by the CDC.
    • Have a spouse or dependent who is diagnosed with COVID-19 using a CDC-approved test.
    • Experience adverse financial consequences as a result of being quarantined, furloughed, laid off or having work hours reduced due to COVID-19.
    • Be unable to work due to lack of child care as a result of COVID-19.
    • Own a business that has closed or is operating under reduced hours due to COVID-19.
    • Meet other factors as determined by the Secretary of the Treasury.
      • If you qualify based on the above:
        • This is retroactive to Jan. 1. Thus, any RMD you made this year can be reclassified.
        • Any taxes due on the withdrawal can be paid over three years, starting with 2020.
          • You can avoid the tax by returning any amounts withdrawn to your account within the next three years.
    • Evictions are prohibited by landlords whose mortgage is backed by HUD, Fannie Mae, Freddie Mac, the Rural Housing voucher program or the Violence Against Women Act for 120 days starting March 27, 2020.
    • Students who had received a Pell Grant or federally subsidized loan who have been forced to drop out of school because of COVID-19 will not have to return their grants or loans.
    • Your employer can give you up to $5,250 tax free in 2020 to help you pay for your student loan.
    • Restaurants and hotels are eligible.
    • The loans will be forgiven if you continue paying your employees, and use the loan to pay for payroll, mortgage interest or rent, and covered utilities. Loan forgiveness will be reduced based on the reduction of workforce or salaries.
    • Loans not forgiven can be repaid over the next 10 years.
    • Apply by contacting the SBA.

You can withdraw up to $100,000 in 2020 from your retirement accounts and IRAs without paying

the IRS 10 percent penalty that might otherwise apply, as a “COVID-19 emergency” distribution.

For a withdrawal to qualify, you must:

If your workplace retirement plan permits loans, you can now borrow up to the full vested value of

your account, or $100,000, whichever is less.

If you are age 70 or older and still working, you can continue contributing to an IRA.

Avoiding Foreclosure or Eviction


If your mortgage is federally backed, you can ask the servicer for forbearance (stop making

payments) for up to 180 days. Forbearance can be extended for an additional 180 days.

  • Federally backed mortgages include those purchased by Fannie Mae and Freddie Mac, insured by the departments of Housing and Urban Development, Veterans Affairs or Agriculture or made directly by USDA.

If you rent your home in a multifamily dwelling, and your landlord has requested forbearance, they 

are prohibited from evicting you for lack of rent payment for up to 90 days.

Charitable Contributions

  • If you itemize deductions on your tax return, all of your cash donations are deductible, up to 100 percent of your Adjusted Gross Income, to charities that are designated as 501(c)(3) organizations.
  • If you use the standard deduction on your tax return, you can deduct up to $300 in cash donations to qualified charities.

Students and Student Loans


If you have federal student loans outstanding, you don’t have to make any principal or interest

payments until after Sept. 30. You will incur no penalty for deferring payments.

Also, the grants or loans students have received will not count against their lifetime eligibility.

For Independent Contractors, Sole Proprietors, Owners of a Small Business
and Non-Profit Organizations


You can get a Small Business Administration loan if your business or nonprofit has less than 500

employees, even if you are self-employed or operate as a sole proprietor or independent contractor.

Loans are available up to $10 million. The amount is based on payroll, up to $100,000 per employee.

The maximum interest rate is 4 percent per year.

Payments can be deferred for at least six months.


Independent contractors and sole proprietors are eligible for emergency Economic Injury Disaster

Loans without providing personal guarantees for advances, and loans up to $200,000.


Your 2019 Federal Tax Return

The IRS has delayed the 2019 tax-filing deadline from April 15 to July 15.

Some states have delayed their filing deadlines to July 15 as well, but others have not. Check with your tax advisor to see when your state tax return and payment is due.

  • You do not need to file an extension request; the delay to July 15 is automatic.
  • You do not have to pay 2019 federal income taxes until July 15.
  • If you are owed a tax refund, you can file now or anytime up to July 15; the sooner you file, the sooner you will get your refund.

If you have questions about the CARES Act or any other aspect of your personal finances, we’re here to help. Give us a call to schedule a meeting — via phone or video conference — with one of our experienced, fee-only financial planners.

We wish you the best of health and safety during this crisis.

© 2020 Edelman Financial Engines, LLC. Edelman Financial Engines® is a registered trademark of Edelman Financial Engines, LLC. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed.

This material was prepared for informational and/or educational purposes only. Neither Financial Engines Advisors L.L.C (also referred to as Edelman Financial Engines) nor its affiliates offer tax or legal advice. Be sure to consult with a qualified tax or legal professional regarding the best options for your particular circumstances.

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