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What You Need to Know Now: Stimulus Checks and the CARES Act

Posted by Rebecca Hellmann on Apr 1, 2020 6:45:00 AM

Political posts on social media of what is included in the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act), which was signed by President Trump in late March 2020. (And let’s face it, we’re all spending a lot more time on social media right now.)

While there is ongoing back-and-forth regarding which party stuck what, where, when, and why that particular item is wrong in some fashion, few memes or commentaries are highlighting the ins-and-outs of how the CARES Act will affect individuals. So, what is in this bill for you?stimulus-2020

  1. Your Federal taxes aren’t due in April. Federal tax filings, which would have been due on April 15, 2020, are now due July 15, 2020. State tax filing dates are dependent on individual state governments.

The deadline change does not mean you should delay the paperwork portion of your tax filing. After all, what if you would be getting a refund? Filing your taxes now could get your money to you in time to help you financially. However, if you do all the calculations and discover you will owe the government money, you have some time to save up.

  1. You can claim Charitable Donations for standard deductions in 2020. Even if you usually qualify for the standard tax deduction for your income level, the CARES Act will allow for an additional deduction for charitable donations up to $300. Those who use itemized deductions should be able to claim charitable contributions up to 100% of adjusted gross income (instead of the standard 50%).

Some limitations apply. Only donations made to public charities and foundations classified as tax-exempt organizations by the IRS are allowed. You can find out more about qualifying charities here.

  1. Unemployment is expanded and increased. Self-employed and “gig” workers have historically been unable to apply for unemployment benefits. The CARES Act expands eligibility to include individuals affected by COVID-19 so long as they are willing to self-certify to conditions preventing them from working are directly related to the current public health emergency. In addition to the self-employed and “gig” workers, this expansion includes freelancers, independent contractors, part-time workers, and new hires who could not begin their employment.

The CARES Act also increases unemployment payments an extra $600 per week on top of existing state program benefits. While standard state-provided unemployment ends after 26 weeks, those who remain unemployed beyond that time-frame will continue to see the $600 weekly payments for up to 13 additional weeks. All expanded payments expire on July 31, 2020.


  1. Most people will receive a “Recovery Rebate.” Of all the items in the CARES Act, you have most likely heard the most about something many are calling “economic stimulus checks.” These payments are set to be delivered using information from 2018 and 2019 tax filings. UPDATE: The US Department of the Treasury has announced that Social Security recipients will not need to file tax returns to receive their stimulus checks.

 Per the IRS as of March 30, 2020, “People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment.”

Individuals with an adjusted gross income of up to $75,000 and up to $150,000 for married couples will receive $1,200 per person. Parents with dependent children will receive an additional $500 per child. Adults receiving funds must not be claimed as a dependent by another taxpayer and must have a work-eligible Social Security card. Children claimed must have a valid Social Security number or Adoption Taxpayer number.

Payments are reduced by $5 for every $100 a taxpayer’s income exceeds the prescribed cap. The Recovery Rebate is completely phased out for individuals making over $99,000, head-of-household with one child making over $146,500, and married filing jointly reporting over $198,000.

The money being sent out is an advance on a 2020 tax credit. The IRS will be using your 2018 or 2019 tax information to estimate your 2020 income and issue payment accordingly. If you receive “Recovery Rebate” money, but your 2020 income exceeds the cap, you will be required to pay back the difference. Should your 2018 or 2019 income render you ineligible, but a loss of income in 2020 puts you below the cap, the amount for which you would have qualified could be applied.

  1. In case of emergency, early withdrawals are allowed. Taking money from any of your retirement accounts (should you have them) is not recommended. However, should you be in absolutely dire straits, there is good news. The CARES Act temporarily waves the 10% penalty for early withdrawals of qualifying accounts up to $100,000 for individuals who are diagnosed with COVID-19, have a spouse or dependent with COVID-19 or are experiencing financial hardship directly related to the COVID-19 health emergency. Please contact a financial professional to determine all of the ins-and-outs of making an early withdrawal before resorting to this option.

There is a lot of commotion about what is included in the CARES Act and how it addresses or does not address immediate and long-term concerns of the current health emergency. Fortunately, there are quite a few inclusions that can directly help those facing financial difficulties in the months ahead.

Click here for some more ideas about how to handle finances amid COVID-19.

Topics: consumer budgets, money management, household budgets, financial education


Written by Rebecca Hellmann

Rebecca Hellmann has been researching and writing in the payments technology industry for over six years. Prior to the payments industry, Rebecca developed marketing, branding, and content for businesses such as Bil-Jac, Benjamin Franklin Plumbing, and Homestead Furniture. She currently works as Director of Marketing for FCTI, Inc.
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