The economic impact of the COVID-19 outbreak has spread far and wide – which is why Congress acted this week to provide emergency relief to workers, families, small businesses, and distressed industries. The CARES Act is big, targeted, and will make a difference. The legislation includes important provisions that give direct relief to individuals in the form of direct payments, tax relief, and increased unemployment benefits. Click here to see a topline summary of this legislation and read below to see how you could see relief.
- Workers, families, and small businesses come first.
- $1,200 (individuals) or $2,400 (married) checks will be on their way to American families.
- Provides vast resources to keep small businesses open, including assistance with cashflow and providing credits for employers to keep employees on payroll.
What you need to know:
- Money for American families: This comes in the form of a one-time tax rebate check of $1,200 per individual in the household and $500 per child for those with a valid SSN. There are no earned income or tax liability requirements to receive these rebate checks. The full rebate amount is available for those with incomes at or below $75,000 for individuals, $112,500 for head of household, and $150,000 for married couples. Payments are phased out above those thresholds until it is phased out completely for single taxpayers with incomes exceeding $99,000 and $198,000 for joint filers.
- Loosens Rules on Retirement Accounts: Older Americans that are subject to mandatory minimum distributions from their retirement accounts would be able to keep their capital invested instead of being forced to cash out to draw on that capital without penalty, which would be suspended for 2020. Similarly, the bill also waives the 10% penalty on coronavirus-related early distributions from 401(k)s and IRAs, which applies to distributions made at any time during 2020.
- Provides Another Option for Employers to Keep Connected to Their Employees: Employers of all sizes that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit on up to $10,000 of wages paid to those employees. This will help workers keep their jobs, help local businesses ride out this storm, and ensure that furloughed workers have jobs to return to.
- Delays Payroll Tax Payments for Employers: Employers would be able to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion of extra cash flow for businesses.
- Restores Supports for Businesses Suffering Losses: The bill also allows businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds.
- Encourages Businesses to Invest in Improvements: The bill would fix cost recovery for investments in Qualified Improvement Properties, which will allow businesses that made these investments in 2018 and 2019 and receive tax refunds now.
The Details: Eligibility for checks from the IRS will be based on 2018 and 2019 returns, and for Social Security (retirement and disability) and Railroad Retirement beneficiaries, they will use information from the Social Security Administration and Railroad Retirement Board.
Expanded Unemployment Benefits:
- Expands the size and scope of unemployment benefits.
- Includes relief for workers who are self-employed, as well as independent contractors.
- Ensures these changes are temporary.
What you need to know:
- Includes $250 billion to Expand Unemployment Benefits: Provides economic relief and much-needed support for workers by making a significant investment in unemployment benefits.
- Unemployment Benefits for More Americans: Makes sure self-employed and independent contractors, like Uber drivers and gig workers, can receive unemployment during the public health emergency. The bill also includes support to state and local governments and nonprofits so they can pay unemployment to their employees.
- More Money for a Longer Period for More Workers: Makes benefits more generous by adding a $600/week across-the-board payment increase through the end of July. In addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow.
- Temporary Provisions: (ßdoes this need to be bold?)The expansion in unemployment benefits expires at the end of 2020 in recognition of the temporary nature of this challenge.
- Unemployment insurance is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law. Virginians can learn more about applying for unemployment here: http://www.vec.virginia.gov/unemployed/Claimant-Handbook/Claimant-Handbook/Applying-for-Benefits.
- For detailed instructions on how to file or re-open a claim, click here.
- Once your claim is processed by the VEC, you will receive three important documents. The Benefit Rights document explains eligibility requirements and what you need to do each week to claim your benefits. The Monetary Determination document shows how much money you may be eligible to receive. You will also receive a PIN. You need the PIN to claim weekly benefits and to make inquiries about your claim.
- Beginning with claims effective March 15, 2020, Governor Northam has directed that the one week waiting period and the requirement to conduct a weekly job search both be suspended for those receiving unemployment insurance benefits. If you are eligible for benefits, a payment should be processed shortly after you claim your first full week. You will need to refer to the Benefit Rights document for instructions on claiming weekly benefits.
- NOTE: State unemployment offices are experiencing an unprecedented spike in claims and many workers are not covered under regular state unemployment laws. Filings for U.S. unemployment benefits are poised to surge to more than 2 million. The CARES Act will make a tremendous difference for keeping workers afloat.
In addition, the full, final text of the CARES Act can be found here. Your question not answered here? Please contact my office by email or at 202.225.4261 and we will either answer your question or put you in touch with someone who can.
Please share this information with your friends, family, and neighbors as information is key during times such as these. I will continue to update you as more information becomes available.