Part of the Startup Guide to the Apocalypse
If like me, you’ve been staying away from the news due to the vitriol and panic, you might have missed that the House and Senate passed the CARES Act – at $2.2 trillion dollars for economic stimulus, it is the largest economic rescue package ever.
This article will be a fluff-free, panic-free, Frankenstein of a resource guide for employees on surviving the panic-pocalypse. If you’re an employer feel free to keep reading because this is also important or just click here to read the Employer Guide.
Our purpose was to get this out quickly so we’ll update this as we have more information, feel free to access more of the Startup Guide to the Apocalypse at the bottom.
[Last updated 03/27/20])
Table of Contents:
Who’s Eligible for Checks, How Much, and Other Burning Questions
First, 0ff, everyone that has an employment of some type (whether that’s self-employment or with an employer) can get a check.
Q: How much will I get?
It depends on how much you make.
If you made less than $75,000 in 2019, you will be eligible for the full payment of $1,200. Couples who filed jointly and made less than $150,000 will get $2,400. An individual who filed as “head of household” and earned $112,500 or less gets $1,200.
If you made more than $75,000, your payment will be reduced by $5 for every $100 of income that exceeds the limits. So if you made $80,000 in 2019, you will receive $950. The payment decreases to zero for an individual making $99,000 or more or a couple making $198,000 or more.
If you’re a family of four, you’ll be eligible for a maximum of $3,400.
Q: When is the money coming?
Treasury Secretary Steven Mnuchin said Wednesday the checks will be sent out “within three weeks” to people for whom the IRS has information. You don’t need to sign up or fill out a form to receive a payment if you’ve been working and paying taxes since 2018.
The Treasury Department will also run a “public awareness campaign” with information about the program, including for people who didn’t file a tax return for 2018 or 2019.
Q: If my payment doesn’t come soon, how can I be sure that it wasn’t misdirected?
According to the bill, you will get a paper notice in the mail no later than a few weeks after your payment has been disbursed. That notice will contain information about where the payment ended up and in what form it was made. If you couldn’t locate the payment at that point, it would be time to contact the I.R.S. using the information on the notice.
Q: Will there be multiple payments?
No, this legislation only authorizes one-time payments. But House Speaker Nancy Pelosi suggested on CNN that Congress could revisit the issue: “We think we’ll get more direct payments in another bill.”
Q: How will it be sent?
If you’ve received a tax refund in the last two years by direct deposit, that’s where the money will be sent. If not, the IRS can mail a check to your “last known address,” and it has 15 days to notify you of the method and amount of the payment. They’ll send a phone number and appropriate point of contact so you can tell them if you didn’t receive it.
If you’ve moved recently, it may be a good idea to notify the IRS as soon as possible.
Q: How does the gov’t calculate how much I earned?
Have you filed your taxes for 2019 already? If so, the checks will automatically be based on your 2019 return. Look for your “adjusted gross income” (Line 7 on your Form 1040 tax return in 2018, or line 8B on a 2019 return.) If you haven’t filed your 2019 taxes yet, it’ll be based on your 2018 return.
Q: Will there be damage to my credit report if I take advantage of any virus-related payment relief, including the student loan suspension?
No. There is not supposed to be, at least.
The bill states that during the period beginning on Jan. 31 and continuing 120 days after the end of the national emergency declaration, lenders and others should mark your credit file as current, even if you take advantage of payment modifications.
If you had black marks in your file before the virus hit, those will remain unless you fix the issues during the emergency period.
Credit reporting agencies can make errors. Be sure to check your credit report a few times each year, especially if you accept any help from any financial institution or biller this year.
Q: I made too much money in 2019 to qualify. But now I’ve been laid off. Am I out of luck?
Not necessarily, but you’ll have to wait.
If you made too much to qualify in your last tax filing, you probably won’t be eligible for the cash benefit immediately. But you can apply for it when you file your 2020 tax return if your income drops below the $99,000 threshold for individuals (which doubles for couples) this year.
The IRS is expected to create a system to ensure help for people who fall into this category.
Q: I’m not an American citizen. Do I qualify?
Yes — as long as you’re living and working in the U.S. with a valid Social Security number. That includes green card holders, and it generally includes those on work visas, such as an H-1B and H-2A. But it generally excludes visitors and people who are in the U.S. illegally.
Q: Are the cash payments taxable?
Q: I live in Puerto Rico or another U.S. territory. Is that a problem?
Not at all. There’s a special provision ensuring that people living in U.S. territories, even ones that have a different tax system, are still eligible.
Q: What if I just got laid off or furloughed? Will I get help?
As long as you have a Social Security number, you should be eligible to apply for the relief payments under the new system created by the IRS.
Q: I owe back taxes. Will the IRS snatch my check?
The bill doesn’t exclude you from getting payment if you owe past-due taxes. That said, the IRS has yet to set up the new system.
Q: Are gig workers, part-time, freelancers and independent contractors covered?
Yes, self-employed and part-time people are newly eligible for unemployment benefits.
Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.
Q: How much will part-time and gig workers receive?
It depends on your state.
Benefits will be expanded in an attempt to replace the average worker’s paycheck, explained Andrew Stettner, a senior fellow at the Century Foundation, a public policy research group. The average worker earns about $1,000 a week, and unemployment benefits often replace roughly 40 to 45 percent of that. The expansion will pay an extra amount to fill the gap.
Under the plan, eligible workers will get an extra $600 per week on top of their state benefit. But some states are more generous than others. According to the Century Foundation, the maximum weekly benefit in Alabama is $275, but it’s $450 in California and $713 in New Jersey.
So let’s say a worker was making $1,100 per week in New York; she’d be eligible for the maximum state unemployment benefit of $504 per week. Under the new expansion, she gets an additional $600 of federal pandemic unemployment compensation, for a total of $1,104, essentially replacing her original paycheck.
States have the option of providing the entire amount in one payment or sending the extra portion separately. But it must all be done on the same weekly basis.
Q: What if I’m a part-time worker who lost my job because of a coronavirus reason, but my state doesn’t cover part-time workers? Am I still eligible?
Yes. Part-time workers are eligible for benefits, but the benefit amount and how long benefits will last depend on your state. They are also eligible for the additional $600 weekly benefit.
Q: What if I have Covid-19 or need to care for a family member who has it?
If you’ve received a diagnosis, are experiencing symptoms or are seeking a diagnosis — and you’re unemployed, partly unemployed or cannot work as a result — you will be covered. The same goes if you must care for a member of your family or household who has received a diagnosis.
Q: What if my child’s school or daycare shut down?
If you rely on a school, daycare or another facility to care for a child, elderly parent or another household member so that you can work — and that facility has been shut down because of coronavirus — you are eligible.
Q: What if I’ve been advised by a health care provider to quarantine myself because of exposure to coronavirus? And what about broader orders to stay home?
People who must self-quarantine are covered. The legislation also says that individuals who are unable to get to work because of a quarantine imposed as a result of the outbreak are eligible.
Q: I was about to start a new job and now can’t get there because of an outbreak.
You’re eligible for benefits. You will also be covered if you were immediately laid off from a new job and did not have a sufficient work history to qualify for benefits under normal circumstances.
Q: I had to quit my job as a direct result of coronavirus. Would I be eligible to apply for benefits?
It depends. Let’s say your employer didn’t lay you off but you had to quit because of a quarantine recommended by a health care provider, or because your child’s daycare closed and you’re the primary caregiver. Situations like that are covered.
But this provision wasn’t intended to cover people who quit (or want to quit) because they fear that continuing to work puts them at risk of contracting coronavirus, according to congressional aides.
Q: My employer shut down my workplace because of coronavirus. Am I eligible?
Yes. If you are unemployed, partly unemployed or unable to work because your employer closed down, you’re covered under the bill.
Q: The breadwinner of my household has died as a result of coronavirus. I relied on that person for income, and I’m not working. Is that covered?
Q: Whom does the bill leave out?
Workers who are able to work from home, and those receiving paid sick leave or paid family leave are not covered. New entrants to the workforce who cannot find jobs are also ineligible.
Q: How long will the payments last?
Many states already provide 26 weeks of benefits, though some states have trimmed that back while others provide a sliding scale tied to unemployment levels.
The bill provides all eligible workers with an additional 13 weeks. So participants in states with 26 weeks would be eligible for a total of 39 weeks. The total amount cannot exceed 39 weeks, but it may be shorter in certain states.
The extra $600 payment will last for up to four months, covering weeks of unemployment ending July 31.
Q: How long would the broader program last?
Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27, 2020, and through Dec. 31, 2020.
Q: I’m already receiving unemployment benefits. Will I receive any help?
Yes. Even if you’re already receiving unemployment benefits for reasons unrelated to the coronavirus, your state-level benefits will still be extended by 13 weeks. You will also receive the extra $600 weekly benefit from the federal government.
Q: My unemployment recently ran out — could I sign up again?
Yes. If you’ve exhausted your benefits, eligible workers can generally reapply. But how much you get and for how long depends on the state where you worked. Everyone gets at least another 13 weeks, along with the extra $600 payment through July 31.
Q: Are any unemployment benefits retroactive?
Maybe. If you are newly eligible for benefits, you may be able to claim state-level benefits retroactively, back to Jan. 27. But it will ultimately be determined by your state, which will consider the date that you became unemployed and any extenuating circumstances that prevented you from filing earlier, according to a representative for the Department of Labor.
People who are already receiving unemployment will not get any retroactive benefits. If your benefits run out, you’ll be eligible for the added 13 weeks of state-level benefits (as long as you continue to meet the eligibility criteria).
The extra $600 payment being paid by the federal government is also not retroactive.
Q: Will this income disqualify me from any other programs?
Maybe. The additional $600 benefit counts as income when determining eligibility for means-tested programs, except for Medicaid and the Children’s Health Insurance Program, known as CHIP.
Q: How long will I need to wait for benefits?
States have been incentivized to waive the one-week waiting period, but it’s unclear how long it will take to process claims — especially with state offices so strained by a flood of them.
What to do About Student Loans
Q: The federal government has already waived two months of payments and interest for many federal student loan borrowers. Is there a bigger break now with the new bill?
Yes. Until Sept. 30, there will be automatic payment suspensions for any student loan held by the federal government. It is hard to contact many of the loan servicers right now, so check your account online in the coming weeks. Once you are logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.
Q: How do I know if my loan is eligible?
If you’ve borrowed money from the federal government — a so-called direct loan — in the past 10 years, you’re definitely eligible. According to the Institute for College Access & Success, 90 percent of loans (in dollar terms) will be eligible.
Older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible, nor are Perkins loans, loans from state agencies, or loans from private lenders like Discover, Sallie Mae, and Wells Fargo. The holders of all those kinds of loans may be offering their own assistance programs.
Within a few weeks, you are supposed to receive a notice indicating what has happened with your federal loans. You can choose to keep paying down your principal if you want. Then, after Aug. 1, you should get multiple notices letting you know about the cessation of the suspension period and that you may be eligible to enroll in an income-driven repayment plan.
Q: Will my loan servicer charge me interest during the six-month period?
The bill says that interest “shall not accrue” on the loan during the suspension period.
At the end of the suspension, keep a close eye on what your loan servicer does (or does not do) to put you back into your previous repayment mode. Servicer errors are common.
Q: Will the six-month suspension cost me money since I’m trying to qualify for the public service loan forgiveness program by making 120 monthly payments?
No. The legislation says that your payment count will still go up by one payment each month during the six-month suspension, even though you will not actually be making any payments. This is true for all forgiveness or loan-rehabilitation programs.
Q: Is wage garnishment that resulted from being behind on my loan payments suspended during this six-month period?
Yes. So is the seizure of tax refunds, the reduction of any other federal benefit payments and other involuntary collection efforts.
Q: Are there changes to the rules if my employer repays some of my student loans?
Yes. Some employers do this as an employee benefit. Between the date, the bill is signed and at the end of 2020, they can offer up to $5,250 of assistance without that money counting as part of the employee’s income. If the employer pays tuition for classes an employee is taking, that money will also count toward the $5,250.
How to Pause Your Federal Student Loans
The U.S. Department of Education has granted a payment waiver of at least 60 days to many people, according to a news release. But it’s not necessarily automatic.
In general, you have to call your loan servicer to request a waiver and to make sure that your loan is eligible. If you are already more than 31 days late, your loan servicer will suspend your payments automatically. Your servicer will not charge interest during this time, and the waiver is not supposed to hurt your credit score.
The waiver does not apply to private student loans. One big private lender, Sallie Mae, said it is offering suspension of payment for up to three months, with no damage to a borrower’s credit. Another one, Navient, made an identical offer for “qualified” borrowers; a spokesman said that you just need to contact the company and explain how your financial situation has changed.
A third big private lender, Wells Fargo, says it will offer help, but a spokesman said the bank would not commit to a set number of months or any other specifics.
Using the waiver to pause your federal student loan payments may not be the best move for people in distress. If your income has fallen dramatically, it may be better to enter an income-driven repayment program. Low-income borrowers enrolled in those programs often end up with no monthly payments for as long as their income stays low.
If you do make any changes to what you’re paying, don’t forget to adjust any automatic payments you have set up, said Bonnie Latreille of the Student Borrower Protection Center.
Last week, the federal government announced an automatic student loan interest waiver for federally-held loans. That remains in effect if you don’t request the new payment waiver. But the interest waiver alone doesn’t lower your monthly payment: Instead, you’d pay what you normally do, and the full amount will go toward the loan’s principal. Ron’s column explains the details.
Pulling From Retirement Accounts
Q: Which retirement account rules are suspended?
For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover.
This change would not affect old-fashioned pensions.
Q: What if I have to take money out of my I.R.A. or workplace retirement plan early?
You can withdraw up to $100,000 this year without the usual 10 percent penalty, as long as it’s because of the outbreak.
You will also be able to spread out any income taxes that you owe over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.
This exception applies only to coronavirus-related withdrawals. You qualify if you tested positive, a spouse or dependent did or you experienced a variety of other negative economic consequences related to the pandemic. Employers can allow workers to self-certify that they are qualified to pull money from a workplace retirement account.
Q: Can I still borrow from my 401(k) or other workplace retirement plan?
Yes, and you can take out twice the usual amount. For 180 days after the bill passes, with certification that you’ve been affected by the pandemic, you’ll be able to take out a loan of up to $100,000. Usually, you can’t take out more than half your balance, but that rule is suspended.
If you already have a loan and were supposed to finish repaying it before Dec. 31, you get an extra year.
Making Charitable Contributions
Q: I want to help people who are suffering from the pandemic. Does the bill do anything about charitable donations?
Yes. The bill makes a new deduction available — and not just for 2020 — for up to $300 in annual charitable contributions. It’s available only to people who don’t itemize their deductions, and you calculate this new one by subtracting the amount you give from your gross income.
To qualify, you have to give cash to a qualified charity and not to a donor-advised fund, which is a charitable account that affluent people often use to bunch contributions in a particular year in order to maximize deductions. If you’ve already given money since Jan. 1, that contribution counts toward the $300 cap.
Q: I am lucky to have substantial wealth, and I want to give more to charity than I usually do. Have the limits on charitable deductions changed?
Yes, they have. As part of the bill, donors can deduct 100 percent of their gift against their 2020 adjusted gross income. If you have $1 million of income, you can give $1 million to a public charity and deduct the full amount in 2020.
The new deduction is only for cash gifts that go to a public charity. If you give cash to, say, your private foundation, the old deduction rules apply. And while the organizations that manage donor-advised funds are public charities, you do not get the higher deduction for donating cash to your donor-advised fund.
If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.
How Unemployment Insurance Works
A lot depends on where you live.
One important note: You might not have to lose your job to qualify. If you’re quarantined or have been furloughed — and you’re not being paid but expect to return to your job eventually — you may be able to get unemployment benefits.
States set their own rules for eligibility and benefits, which are generally calculated as a percentage of your income over the past year, up to a certain maximum.
Some states are more generous than others, but unemployment typically replaces about 45 percent of your lost income. Most states pay benefits for 26 weeks, but some have pared that back to as little as 14 weeks.
Many states cover only full-time workers, and some have made it more difficult for temporary workers to get coverage. Gig workers are also unlikely to qualify because they’re largely considered self-employed.
There is $1 billion earmarked for unemployment insurance in the coronavirus relief package. Half of that money can be used to immediately bolster staffing, technology and other administrative functions that have struggled to meet demand. States can collect the second half after experiencing a 10 percent rise in unemployment, as long as they take certain steps to temporarily make it easier for applicants to qualify.
Who and What the New Paid Leave Law Covers
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the outbreak, but there are lots of exceptions.
Most workers at small and midsize companies, as well as government employees, can get paid leave as long as they’ve been employed at least 30 days.
Qualified workers can get two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. They can get 12 weeks of paid leave to care for children whose schools are closed, or whose child care provider is unavailable because of the outbreak.
Part-time workers will be paid the amount they typically earn in a two-week period. People who are self-employed — including gig workers like Uber drivers and Instacart shoppers — can also receive paid leave, but they must calculate their average daily income and claim it as a tax credit.
There are gaps, though. Businesses with fewer than 50 workers can apply for an exemption, and companies with more than 500 employees are excluded from the rules entirely. Many workers at big businesses already have paid sick leave, but their low-wage workers are the least likely to be covered. The New America Foundation has published a detailed list of large employers (mostly consumer-facing companies like retailers, restaurant chains and hotels) and their policies.
These changes aren’t permanent, though — the leave law expires Dec. 31.
3 Month Tax Filing Extension
The federal government has moved the tax filing deadline to July 15. You don’t have to file your return or make payments until then, Treasury Secretary Steven Mnuchin wrote on Twitter.
The I.R.S. had already said there will be no interest or penalties for those who wait to pay until July. If you are owed a refund, you’ll still receive it as you normally would if you file your tax return, no matter when you submit it.
If you’ve already filed a return and scheduled a payment for April 15, you can call the I.R.S. at 888-353-4537 and cancel it, according to a reader who did this himself. We tried the number, too, and the cancellation option appeared to be working as he described.
Have a quarterly payment due June 15? An I.R.S. spokesman said that it will still be due then and has not been postponed until July 15. That may change, and we’ll update if it does.
Don’t forget about your state income taxes. The American Institute of Certified Public Accountants is tracking state changes on its website.
Help for Homeowners and Renters
Q: Is there any relief for renters in the bill?
Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac, and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.
Q: Did the legislation make it illegal for any internet provider to cut off service to an individual or small business that can’t pay its bills?
No. You can still have your internet service cut off. Just call your provider and they’ll likely give you an extension.
Q: Did the legislation make it illegal for utility providers to cut off service?
No. You can still have your internet service cut off. Just call your provider and they’ll likely give you an extension.
More Information for Renters
If you rent, the best national resource we’ve found so far is the search-by-state function on Justshelter.org. This offers information on local organizations that can provide advice to renters in distress. Just Shelter’s founders are Matthew Desmond, the author of the book “Evicted,” and Tessa Lowinske Desmond. Mr. Desmond is also the founder of Eviction Lab; it is publishing a list of local and regional actions to pause evictions of renters.
The emergency stimulus bill put a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie, Freddie or the F.H.A. This will last through the end of July, and landlords can’t charge any fees or penalties for nonpayment of rent either.
Regulators have also told landlords whose own mortgages are owned by Fannie or Freddie that they too can use forbearance, just as long as they do not evict tenants after they pause their mortgage payments. The challenge for renters is figuring out whether their landlord has such a mortgage.
If the landlord’s mortgage is not in forbearance, renters who skip payments could be risking eviction if there has not been a local prohibition. (New York, for example, has suspended eviction actions until further notice.)
More Information for Homeowners:
There’s a good chance you can delay your mortgage payment if the outbreak has left you short of money.
The Federal Housing Finance Agency has instructed mortgage servicers to allow borrowers whose mortgages are owned by Fannie Mae or Freddie Mac to delay payments. This forbearance program allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.
Federal housing officials have also announced a nationwide eviction and foreclosure moratorium for borrowers of Fannie or Freddie mortgages, or borrowers whose loans are backed by the Federal Housing Administration — so-called F.H.A. loans. This includes foreclosures that are already in progress.
To find out if Fannie or Freddie own your mortgage, you can search your address on this federal government site.
A coalition of mortgage industry groups representing banks, finance companies and others has said it will also grant payment suspensions of at least three months — and up to 12 months — to homeowners whose loans are not owned by Fannie or Freddie, but they have said their effort requires a federal backstop.
FORECLOSURES AND EVICTIONS
Keeping the Lights on and the Phones Working
Some utility providers are offering to stop cutting people off for nonpayment.
A number of large internet companies have agreed not to terminate residential or small business customers who can’t pay their bills: AT&T, Comcast, Cox, RCN, Sprint, T-Mobile and Verizon. A full list of companies is available on the Federal Communications Commission site.
It is not yet clear whether companies want customers to call to invoke this relief and provide proof or whether they will offer it automatically to everyone. People who need help should call and ask.
A number of water service providers have either suspended shut-offs for nonpayment or don’t shut service off for late payments generally, according to a ProPublica roundup. They include Atlanta; Birmingham, Ala.; Long Beach, Calif.; Los Angeles; Newark; New York City and St. Louis.
In Washington state, the main Seattle area utilities are suspending cutoffs as well. In addition, the provider of electric and water service in Seattle is allowing people to self-certify their recent income reductions in order to qualify for at least half off their bills.
In California, Pacific Gas and Electric has, until further notice, stopped shutting off its services to consumers and businesses who have not paid.
In New York, Con Edison also has temporarily suspended any electric and gas service shut-offs.
If utilities in other areas follow suit, they are likely to publish alerts somewhere on the top of their websites or in the news release section of their pages.
What else is included in the stimulus package?
- Read the 883-page bill and read summaries of the bill’s tax, unemployment, small business, health and “distressed” industries policies.