How The Cares Act Impacts You and Your Family
Barry: Hey, this is Barry. I'm here with Austin. Steve is behind the scenes manning the camera today. He's going to be producer and editor for us today. We wanted to talk to you a little bit about some of the provisions of the CARES act that was signed on March 27th by President Trump, so Austin's going to take it first and talk about the big question that most people have, and that's the check. Austin, tell us about the check.
Austin: So the check, along with the small business loans, have been the two questions we've received most from our clients. Who is going to get cash? When are you going to get it? And what are the provisions involved?
So first of all, if you're an individual, and you made $75,000 of income or less in your last reported tax year, you will receive the full amount of the rebate, which is going to be $1,200. If you file jointly and you have an income up to $150,000 or less, you'll receive the full amount, which will be $2,400 a combination of the two individuals. Lastly, if you file as a head of household, that income number jumps to $112,500. For each child you have, that raises an additional $500. Now the question we have is if you make more than that, at what level does that start to decrease and when will you be eliminated from the provision?
The way this bill works is for each $1,000 you make over your limit, $50 will be taken out of your rebate check. For example, a couple of who makes $160,000 of income will have $500 that would be removed from their rebate check. When is this income based off of? So the last time you filed taxes, whether that was in 2018 or 2019, that is going to be the income number they are going to go off of.
For a lot of people, because of the coronavirus, they are going to make less in 2020 than they made in 2019. At the end of the year, if you would have been given a bigger rebate check, you will see that money show up inn 2021 when you file your taxes.
The last thing is how do I get this money? Where is it going to be sent to? The last time you filed your taxes, the checking account, if you put one on file with the IRS, will be the checking account that they send this rebate check to. For a lot of Americans, they've since changed the checking account, or they never put one in place in the first place. If that's the case, what they're going to start doing is processing checks, and they're going to be able to process about 5 million checks per week to send out to Americans. This process could take up to 20 weeks, depending on the amount of Americans whose checking accounts are inactive, or not applicable anymore. The government is going to process these checks from the order of people who generate the least amount of income in their last tax reported year and climb the latter accordingly.
I think the last thing that I would like to share, is that we have identified this is an area that scammers could come in, and potentially take advantage of people who are waiting for this check, or are not quite sure how they're going to receive this money. I think what we would say is the IRS would never call you. We need to error on the side of caution, and always have your radar up. If something sounds fishy or something sounds too good to be true, always, always error on the side of caution.
Barry: That's a great point, Austin. We were talking earlier that, there's a lot of money on the table, and that's going to attract a lot of people to that will try to get their hands on to that. A lot of those people will have less than, admirable or [00:04:15] honorable intentions. Let me clarify a couple of things, Austin real quick, that makes sure we're understanding correctly. So if I heard you correctly, if I'm a single individual and I made $90,000 in 2019, I don't qualify for this. But if I only make $50,000 in 2020 I qualify and will still receive a check, but it won't come until next year, right?
Austin: That's correct. If by the 2020 numbers, you qualify more, you will receive a rebate check. One thing to add: If you receive money now, but it turns out based on your 2020 income, you would not have received any money. It doesn't work the same way. You don't have to pay it back.
Barry: The other thing I was thinking too, as I talked with my mother yesterday who is 87 and she primarily lives on social security, she'll get a check. There's no age limit to this. There's no provision that says, if all you receive is social security, you don't receive a check.
A couple of things that I wanted to address real quickly on the provisions of the CARES Act as it relates to IRAs. Number one is that, in general, for tax filing, that deadline, and most of you all probably already heard this, but the tax filing deadline has been extended from April 15th to July 15th. and everything that comes along with that has been extended. So for taxes that are due, the ability to contribute to IRAs, Roth IRAs, all of that has been extended to the July 15th deadline. Second, the required minimum distributions that, would have been required for 2020, those have been suspended altogether for 2020. You don't have to take RMDs for 2020 if you've already taken them. There's a couple of ways that you can put that money back if you choose to, and there's a lot of details to that. I would just ask if you're curious about that and want to know more, just give us a call.
Two other things I would say real quickly: one are student loans. The student loan interest payments have been suspended until September 30th. Also, for federally backed mortgages, there's a provision in there, where a borrower can get a forbearance on that for up to 180 days and potentially an additional hundred and 80 days beyond that as well. If you have questions, reach out to us and let us know. We'd be glad to point you in the right direction. And at the end of this video, we'll include some links to some sites, primarily government sites, that will provide some more details to some of these things that we've talked about.
Lastly, we would just say thank you as always, for the opportunity to be of service. It's a real privilege that we have, and would want you to know in these times of uncertainty that number one, to stay safe. Be safe, and if you have any questions at all that we can help with, please call us. Thank you.
www.irs.gov/coronavirus
www.home.treasury.gov/policy-issues/cares
www.congress.gov/bill/116th-congress/senate-bill/3548/text