Fact Checked

CARES Act relief: What you need to know

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As the U.S. struggles with fallout from the new coronavirus, Congress has moved to shore up the economy by passing a $2 trillion emergency stimulus package.

The massive emergency spending measure provides some economic relief for individuals, businesses and the healthcare industry in response to the COVID-19 pandemic.

Signed into law on March 27, the Coronavirus Aid, Relief and Economic Security Act includes direct payments to many Americans, an expansion of unemployment benefits and billions in aid to large and small businesses.

Click on the links below to see some of the key provisions of the CARES Act, organized by who benefits.



Individuals

Direct payments

Most individuals earning up to $75,000 can expect a one-time payment of $1,200. Married couples who file a joint return will receive $2,400. Up to an additional $500 is available for each qualifying child. The payments, which are structured as tax rebates, phase out for upper income brackets. Single filers with income exceeding $99,000 and joint filers with income over $198,000 with no children aren’t eligible.

Enhanced unemployment benefits

The federal government is boosting state unemployment benefits by $600 a week through July 31. Additionally, the CARES Act adds 13 weeks of unemployment insurance so that people maxing out the number of weeks under their state plan would get an extension. Gig workers and those who are self-employed — who typically don’t qualify for unemployment insurance — are eligible for benefits. To find out about unemployment relief in your state, visit the U.S. Department of Labor’s CareerOneStop.

Health plans

The CARES Act requires group health plans to cover preventive items, services and vaccines for COVID-19 with no copayments.

Charitable deductions

Taxpayers who do not itemize their deductions can receive an above-the-line deduction up to $300 for cash contributions made to certain charitable organizations.

Retirement fund loans

Rules for hardship distributions from retirement accounts have been relaxed, allowing people diagnosed with COVID-19 or who are affected by coronavirus-related economic losses to withdraw up to $100,000 from their retirement plans. The CARES Act temporarily waives the 10% early withdrawal penalty for those under age 59½. Distributions are still taxed, but individuals can also choose to re-contribute the amount they withdrew from the retirement fund over the course of three years.

Homeowners and renters

Forbearance for federally backed mortgages

Under the CARES Act, homeowners facing financial hardship because of the coronavirus can contact their mortgage servicer to get deferred or reduced payment options for up to 180 days  — and can request an extension for an additional 180 days — if their loans are backed by the federal government. Eligible loans include those backed by the Federal Housing Administration, Veterans Affairs, the U.S. Department of Agriculture, Fannie Mae and Freddie Mac. However, loan servicers may have options for those with loans that are not federally backed. Contact your servicer to find out what relief may be available to you. If you don’t know who your loan servicer is, you can visit the Mortgage Electronic Registration Systems website.

Moratorium on foreclosures

Servicers of federally backed mortgage loans are prevented from initiating any foreclosure process for at least a 60-day period that began on March 18, 2020.

Eviction relief for renters in federally backed housing

The CARES Act suspends evictions of renters living in single-family and multifamily properties with federally backed mortgages for 120 days from March 27, 2020. These landlords also can’t charge any fees or penalties related to nonpayment of rent. Note that the moratorium only applies to evictions for nonpayment of rent, not for other causes.

Students

Student loan payments

Payments on federal student loans — including direct loans, Perkins loans and Federal Family Education Loans owned by the U.S. Department of Education — are automatically suspended through Sept. 30, 2020. Keep in mind that you are not eligible if you have a private loan, a Federal Family Education Loan or a federal Perkins loan not owned by the U.S. Department of Education. If you don’t want an administrative forbearance and want to continue making payments, you need to contact your loan servicer to opt out.

Employer-supported student loan assistance

Employers can contribute up to $5,250 toward a worker’s student debt on a tax-free basis through the end of 2020. The payments will not be considered a taxable benefit for the employee.

Small businesses

Employee retention credit

Eligible employers affected by the coronavirus may take a refundable credit against the employer portion of their Social Security payroll tax equal to 50% of qualified wages. The credit is determined quarterly and effectively capped at $5,000 per eligible employee. This program is limited to businesses that have suffered at least a 50% loss of revenue or have been forced to curtail or suspend operations because of the coronavirus. Keep in mind that if you elect to participate in this program, you won’t be eligible for the Paycheck Protection Program described below.

Paycheck Protection Program

The Small Business Interruption Loan under the Paycheck Protection Program offers small businesses up to eight weeks of cash-flow assistance to keep workers on the payroll. Loans up to $10 million are available to businesses with fewer than 500 workers, independent contractors, sole proprietors and those who are self-employed. The loans are forgivable if used for payroll costs, mortgage interest, utilities, group healthcare benefits costs, and interest payments on other debts incurred before Feb. 15, 2020. Keep in mind that for the loan to be fully forgiven, at least 75% of the amount forgiven must be used to cover payroll costs. Only 25% of the forgiveness amount may be used for rent, utilities, and interest on mortgage. And again, note that if you elect to participate in this program, you won’t be eligible for the employee retention credit.

Emergency grants

The CARES Act provides grants of up to $10,000 for small businesses to cover to cover operating expenses that could have been met had the disaster not occurred. Applications for an Economic Injury Disaster Loan advance can be made through the Small Business Administration. This loan advance will not have to be repaid.

Hospitals and insurers

Money for health providers and medical supplies

The measure allocates $100 billion to hospitals and community health centers responding to the coronavirus as well as $27 billion for vaccines, therapeutics and personal protective equipment.

Corporations

Airlines

The CARES Act includes $25 billion to pay wages, salaries and benefits of passenger air carrier employees. In addition, the measure offers $25 billion in loans and loan guarantees. Air carriers receiving grants are forbidden from cutting pay or furloughing workers until Sept. 30, 2020.

Other large companies

The measure sets aside about $500 billion for loans, loan guarantees or other aid to big businesses, including airlines. The businesses will have to pay the government back. These loans will not exceed five years and cannot be forgiven.