The CARES Act and What It Means For You.

The world is in the midst of a Health Crisis dealing with the Coronavirus aka COVID-19. Many individuals here in the United States have lost their jobs and are currently relying on a government stimulus package to bridge the gap, but many of these individuals don't understand what the CARES Act means for them.

In response to COVID-19 the U.S. Government implemented a huge $2 trillion economic stimulus package, that provides assistance for American Workers and Families, Small Business, the American Jobs Industry, and Assistance for State and Local Governments. There are a lot of moving parts within this stimulus package, so let's go over a few items.

Tax-Related Provisions

Most American's are aware of the direct payment of $1,200 per individual plus $500 per qualifying child. Most American's aren't aware that this will be treated as a refundable tax credit.

The payment will be reduced or phased-out for:

Single or Married Filing Single Individuals (no children) making between $75k - $99k

Head of Household (one child) making between $112,500 - $146,500

Married Filing Jointly (no children) making between $150,000 - $198,000

Refund of Credit

This credit will be treated as an over-payment of taxes for 2019. Simply stated, you paid to much tax in 2019 and the IRS is now refunding you the funds in 2020 as apart of the economic stimulus package.

Education-Related Provisions

Most Americans are having difficulties paying for their basic necessities. So how do you prioritize student loan payments? The CARES Act has implemented Loan Deferrals and Opportunity Grants.

Federal Student Loan Deferral

The CARES Act has suspended payments and accrual of interest through September 30, 2020. During this period there will be no negative impact on your credit report or to your credit score. Your loans will be reported as in good standing and current.

Educational Opportunity Grant

This grant allows for emergency financial aid to assist undergraduate and graduate students with unexpected expenses and unmet financial needs due to COVID-19.

Housing-Related Provisions

There is also relief for home owners who are experiencing difficulties due to COVID-19.

Avoid Foreclosure

Starting on March 18, 2020, foreclosures on all federally-backed mortgagges are prohibited for a 60-day period. If you are in arearrs due to COVID-19 and in risk of eviction and or foreclosure, you will not be evicted within this 60-day window.

Forbearance

Borrowers with federally-backed mortgages can apply for forbearance that can remain in effect for a period of 180-days. This forbearance allows borrowers to delay payments to future dates with no additional fees, charges, or interest beyond what was orignally due.

While Forbearance maybe a good idea for those in financial harship, it is important to keep in mind that the interest on the loan continues to accure and a lump sum payment may be due at the end of the forbearance period for all missed payments.

The government has implemented these amognst other provisions to help increase the financial viability of it's citizens and the U.S. economy. You can find these and other provisions on the Treasury Website.