You have already heard about the stimulus checks arriving in our bank accounts within the next few weeks. You might already know exactly how you will be spending it!

The stimulus package’s official name is the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act is $2 trillion of an overall $6 trillion effort to save the economy. The goal is to provide relief to both individuals and businesses. Actually, a large part of this act is about business relief. I will address some of the opportunities businesses have, but I will focus mainly on how this impacts you as an individual.

Bear with me as we go through a lot of information together about this act and the stimulus check!

For Individuals:

1) Direct Payment

Taxpayers will receive $1,200 ($2,400 if you filed taxes jointly). The only stipulation is that you must have earned less than $75,000 if you filed single or $150,000 if you filed jointly. Also, you will receive an additional $500 for each dependent child under the age of 17.

NOTE: If you already filed your 2019 taxes, this income limit looks at 2019. If you haven’t yet filed, the limit will apply to your 2018 income. If you earned a little above the limit, you will likely still receive some payment. It is just reduced according to a phaseout schedule.

Overall, 90% of taxpayers are expected to receive these funds!

Here is what seems off to me… Someone could have earned a lot in 2019, but let’s say the pandemic has crushed their income in 2020. They do not receive the stimulus payment! It will be made up to them when they file their 2020 taxes, but it certainly doesn’t help them now.

HINT: If you have recently moved, make sure your address is updated with the IRS!!! The IRS will first try to send the money to the bank account linked to your last tax filing. However, if they can’t do that, it will be mailed as a check. File a Form 8822 to update your address!!

2) Student Loan Relief

All recent grads rejoice! There are NO payments due on federal loans until September 30, 2020. You can simply resume your normal payments at that time. Read more about it from the Federal Student Aid website. Even better, no interest will accrue during that time.

3) Required Minimum Distribution (RMD) Pause

This has been a wild year for RMD takers. First, the SECURE Act changed the required age. Now, the CARES Act allows you to skip your RMD in 2020! If you own an Inherited IRA and use the 5-year rule or stretch provision, you can also hold off on distributing this year.

This will 1) save you money in taxes and 2) prevent you from having to sell assets at market lows to generate cash for the distribution.

HINT: If you have your IRA set up to automatically send you your RMD, then you will want to contact the financial institution to have them skip this year’s distributions if you desire.

4) Above-the-Line Charitable Deduction

If you take the standard deduction, your charitable gifts do not help your tax situation. It’s a bit of a bummer. However, this year, you can deduct up to $300 for charitable giving in addition to the standard deduction!

It might seem small, but since so many people are helping their communities during this time, it is nice to know that it will at least be recognized and rewarded in a small way.

For those who make significant charitable gifts, you may deduct your gift up to 100% of your Adjusted Gross Income in 2020 instead of the regular 60% limit (for cash gifts only).

5) Retirement Account Relief

Generally, if you are under age 59 ½ and take money from your retirement accounts, you will face a 10% penalty. However, the penalty is waived in 2020 on distributions up to $100,000 IF you were legitimately impacted by COVID-19.

Even better, you don’t have to pay the taxes on the distribution in full in 2020. You can spread the tax payment out over a 3-year period.

The maximum loan from a 401(k) was also temporarily raised from $50,000 to $100,000. You can delay the repayment of the loan for 1 year.

6) Unemployment Compensation

The CARES Act and stimulus provided an additional $250 billion for unemployment programs. There is no waiting period before receiving benefits. Benefits are increasing up to $600/week for 4 months. The benefits can also be extended for an extra 13 weeks.

Many workers had their hours reduced because of the pandemic but were not entirely laid off. There is a compensation provision for these individuals.

This compensation is available to even the self-employed and contractors!

7) Health Savings Account (HSA) Loosening

For 2020, telehealth visits can be paid for using HSA funds! With many doctors requesting to see you virtually, it is a relief you may not have to pay for it all out of pocket. Over the counter and menstrual care products are also eligible HSA expenses this year.

This might seem unrelated to the COVID-19 pandemic. However, it will bring individuals small relief during a potentially medically costly time.

For Businesses:

1) Tax Relief

Employers can delay paying a portion of their 2020 payroll taxes until 2021 and 2022. This should help with cash flow struggles. This also applies to the self-employed.

2) Paycheck Protection Program

Business can apply for the loan by June 30, 2020 if they are in real need and have less than 500 employees. The loan may be used for payroll, health insurance, salaries, rent or mortgage interest, and utilities. The first 8 weeks of these expenses can actually be forgiven! The forgiven debt is even non-taxable.

The maximum interest rate for the loan is 4% and payments are deferred for 6 – 12 months.

3) Employee Retention Credit

This is a new credit against payroll taxes for 50% of wages paid to each employee up to a maximum of $10,000 of wages per person.


I realize that this is A LOT of information! I really do feel like it’s important for you to know, because you or someone you love will likely be helped by these provisions and stimulus.

Also, be aware of what our elected officials are doing for us. This aid is sure to help some people now – some people who really really need it. I am glad these people are getting help!

It also makes me wonder how our government can come up with $6 trillion that was previously unavailable. I certainly hope this isn’t a decision that our children will be financially dealing with years from now.

I have three other blogs regarding COVID-19, check them out:

How to Exercise Control During These Crazy Times