The estimated $2.2 trillion Coronavirus Aid, Relief, Economic Security Act stimulus bill, or CARES Act, will provide relief to millions of American impacted by the coronavirus pandemic. The 880-page document consists of many provisions, but we are going to break down some of the most important aspects that you should be aware of.

Stimulus Checks

Most Americans will be receiving a check from the government in the next few weeks, with some exceptions. Individuals will receive checks for $1,200 and $2,400 for couples with an additional $500 per child under age 17. These amounts are subject to phaseouts once your income certain limits adjusted gross income (AGI).

Phases out based on income (AGI):

• $150,000 for Married Filing Jointly
• $112,500 for Head of Household
• $75,000 for all other filers (e.g., Single)

If your AGI exceeds these limits, your benefit will phase out at $5 per $100 or additional income. The benefit for a single filer with no children will be completely phased out at $99,000 and for a married couple filing jointly with no children it will phase out at $198,000.

The government will determine your benefit based on the most current year on file. If your income in 2019 exceeded the phaseout limits but you were eligible in 2018, it may make sense to wait to file your tax return until closer to the new July 15 deadline. It is best to consult a financial advisor or tax representative before making any major decisions. For those that may experience a drop in income in 2020 compared to last year – if you become eligible based on the phaseout limits, you will receive credit on your 2020 tax return.

Where are the stimulus checks being sent to?

Social Security recipients will receive their benefit where they get their Social Security checks. Others will receive a direct deposit wherever they received their 2018/2019 refund. If a direct deposit was not set up with the IRS, they will send the check to the last known address on file. It is important to notify the IRS if you’ve moved since you filed your last tax return. You will need to fill out Form 8822.

Required Minimum Distributions are waived for 2020

The CARES act allows individuals to suspend taking a required minimum distribution (RMD) out of a Traditional IRA, 401(k) or other retirement account for 2020. This also applies to inherited IRA’s and inherited Roth IRA’s. Consult a financial professional to determine what best for your situation.

Mortgage Forbearance

Homeowners with federally insured mortgages may be granted the ability to postpone mortgage payments for up to 180 days and extended for an additional 180-day period, if necessary to due financial hardship.
Contact your loan provider to see what your options are and if you qualify.

Health Care-Related Rules

Individuals will now be able to include over-the counter (OTC) medication as an eligible medical expense. Additionally:

• Medicare beneficiaries can receive no-cost COVID-19 vaccine, when available
• Medicare Part D recipients can request up-to-90-day supply of medication
• Telehealth services temporarily covered by HSA-eligible high deductible health plan (HDHP)

Small Business Owner Provisions

Many small businesses are now eligible for disaster relief loans from the Small Business Administration. Additionally, the CARES Act provides conditions for when loan payments may be deferred, and loan amounts forgiven.

Other Provisions: There are additional tax and accounting provisions such as:

• An employee retention tax credit for employers subject to full or partial suspension of business due to COVID-19
• The ability to delay payment of employer payroll taxes
• Modifications for rules around net operating losses
• Modifications for rules around corporate AMT (alternative minimum tax) credits
• A temporary increase in the limitation on interest deductions imposed by the Tax Cuts and Jobs Act

Student Loan Debt Relief

Individuals with Federal student loans are not required to make any payments on the loans through September 30, 2020. While payments are suspended no interest will accrue during the interim. Additionally, the next six months will still count towards the loan forgiveness programs.

Required payments are suspended, but voluntary payments are not. In order to stop payments, an individual must be proactive.

Understanding the numerous provisions of the CARE Act and how they directly impact your financial situation can be a daunting task. The financial advisors at Dechtman Wealth Management can identify opportunities to help you save money and keep your financial plan on track. Call the office today to schedule your complimentary phone consultation at 303-741-9772! You have nothing to lose and potentially much to gain.