The CARES Act: What You and Your Family Need to Know
We are in largely uncharted waters with regard to the benefits and tax-related consequences that these payments will have on recipients. Information changes daily in some cases. For the most up-to-date information on these issues, we recommend that you check Social Security & Coronavirus Disease (COVID-19), where the SSA will post updates as they arise.
With the Coronavirus Aid, Relief, and Economic Security (CARES) Act now law, many families are hoping to see some relief from the economic consequences of the COVID-19 pandemic. You’ve probably already heard about the direct government payments (more on those later), but while the rebates are the most newsworthy provision, there are other aspects of the law that might help you or your family through this challenging time.
Here are some of the key aspects of the law that you’ll want to know about:
Direct government payments: The government will be giving out rebates of up to $1,200 per person or $2,400 per married couple, with an additional $500 per child. The cash amount drops as income levels climb, phasing out entirely for people who make more than $99,000, or $198,000 for couples.
The rebates will also go to people who claim Social Security benefits, including disability or Supplemental Security Income, provided they are also within the income requirements. For purposes of determining benefits eligibility, rebate checks will not be counted as income. Rebate checks will also not be counted as a resource for twelve months following receipt of the check. Note that if you’re a senior who typically does not file a tax return, you will still be able to receive your rebate check without filing a tax return, if you are a social security recipient.
Extra unemployment benefits: The federal government is adding up to $600 per week to a recipient’s existing state benefits. The benefits will be extended 13 weeks. Self-employed people, freelancers and contractors are also now eligible for unemployment.
Mortgage forbearance: Homeowners struggling to make payments may ask their mortgage servicer for relief, provided the loan is owned by a federally backed lender, either Freddie Mac or Fannie Mae. The act also pauses foreclosures.
Student loan deferral: Federal student loan payments can now be paused on Department of Education held loans until September 30th.
Retirement fund penalties and RMDs changed: The early withdrawal penalty is waived for anyone tapping into a retirement account for COVID-19-related reasons (such as becoming sick or losing a job). Distributions are still taxable, though the tax amount may be spread over three years. If the withdrawal is completely repaid in three years, there is no tax liability. For people who are already retired, required minimum distributions (RMDs) are waived for 2020. Those who would otherwise be required to take distributions under an inherited IRA are also permitted to forego the RMD for 2020.
New Medicare provisions: To avoid unnecessary trips to the pharmacy for an already at-risk population, Medicare recipients may receive a three-month supply of certain medications. Telehealth coverage is expanded, and the requirement that the patient saw the telehealth provider in the past three years has been dropped.
More mental health support: The act extends Medicaid’s mental health services through Nov. 30.
Charitable deductions: For those in a financial position to donate right now, taxpayers will be able to deduct up to $300 from their taxable income.
Insurance coverage: The CARES Act requires private insurance plans to cover treatments and an eventual vaccine, as well as making COVID-19 tests free.
Note, too, that Medicare fraud schemes are on the rise during this pandemic. Protect your information and stay up-to-date on scams.
Speak With an Atlanta Special Needs or Elder Law Attorney
Planning is more important than ever during this challenging time. Call us today at 770-999-9799 to schedule your initial consultation (conducted online) to discuss how we can help your loved ones.