Money for Nothin’ (If You’re Eligible): A Pandemic Response That ‘CARES’
By now we have all probably heard that the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which seeks to pump an estimated $2 trillion into the economy, was signed into law on March 27, 2020. The Act is aimed in large part at helping businesses survive until the national emergency declaration is lifted, and provides for small business loans that may be forgiven in certain circumstances. But what about employees who have been told they cannot work because their employer has to cut back or completely shut down for an unknown amount of time? The following is a brief overview of the benefits available to those who are out of work as a result of the COVID-19 pandemic.
One notable benefit to all those who are eligible is a one-time stimulus payment in the form of an advance refundable tax credit against 2020 income taxes. Eligible individuals will receive $1,200, and eligible married couples who file joint taxes will receive up to $2,400, plus an additional $500 per child under the age of 17. If you earn more than $75,000 as an individual, $112,500 as head of household, or $150,000 if you are married and filing jointly, the amount of the credits start to get reduced, and phases out entirely at $99,000 for individuals, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children. The amount anyone will receive is based on reported income as shown on the most recently filed tax return. Per various news reports, distribution of these payments began earlier this month.
Another important benefit is aimed at supplementing income for all those who cannot work due to the spread of COVID-19 for a longer term. Each state has its own regulations on unemployment assistance, and the maximum amount that eligible individuals can receive varies greatly from state to state – from a low of $240 per week in Arizona to a high of $823 per week in Massachusetts for 2020 (note that Puerto Rico has a maximum of $190 per week). Pursuant to the CARES Act, eligible individuals will receive a flat $600 per week in addition to their state unemployment benefits for up to four months. While some states have already begun distributing the additional funds, many state legislatures determined that they needed additional guidance from the federal government, and had to delay distribution. Although the delay may be frustrating, the additional unemployment benefits are said to be retroactive, and eligible individuals can expect to receive payment for each eligible week from the time the benefit was put in place up to the first disbursement. Once individuals receive the retroactive money, the additional $600 should be included with each weekly unemployment payment for up to a total of four months for now.
Aside from direct payments, there are a host of other financial benefits intended to help out-of-work individuals get through the pandemic. For instance, certain federal student loans have been placed in forbearance through September 30, 2020, meaning that no payments are required and accrual of interest is suspended for that time. Additionally, federally-backed family mortgages can be placed in forbearance at the borrower’s request if they are experiencing financial difficulty because of COVID-19, mortgage foreclosure and eviction processes are limited, and credit reporting guidelines are relaxed for consumers who have requested accommodations because of COVID-19.
As stated above, this is only an overview of the various benefits that may be available to out-of-work employees under the CARES Act depending on their own individual circumstances. If you are an employer with questions on how your employees can benefit from the provisions of the CARES Act, please contact our COVID-19 Attorney Response Team.