Update on Coronavirus Stimulus Package: Treasury Secretary Mnuchin Says Expect Direct Deposit in 3 Weeks!
A COVID-19 Special Edition of the
Better Call Paul Blog
[JACKSONVILLE, FL - 03/27/2020, UPDATED 03/28, 3/29]
So, when the first rumblings of individual payments for coronavirus stimulus were being discussed, I made the commitment to my readers to deliver accurate information about the stimulus checks so you would know what to receive.
As such, each time I update this article, I am leaving the previous updates at the bottom, so my readers can read the entire thread in a single place.
Today's (03/29) update involves 2 important matters:
1. According to CNN and directly from Steven Mnuchin (such a fun name to spell!), the Treasury Department has stated to expect stimulus funds to be direct deposited into individual taxpayers' bank accounts starting in about 3 weeks.
So, first of all -- I hope you all chose direct deposit on your tax returns. I cannot see why anyone would want to wait on a paper check, but hey -- you may have your reasons. With that in mind, those who will be receiving paper checks will probably start to see them in about 6 weeks, which sucks, but yeah....direct deposit and all.
2. The second update comes from the White House, where President Donald Trump has just announced a extension of the White House social distancing guidelines. According to the President, this extension will last until April 30, and can be changed at any time, should the situation unfold differently than expected.
That does it for today's updates....stay tuned for more!
And if you haven't yet read the entire thread below, it's a great idea to go ahead and do so now!
This article was first published to give information about the size and timeline of the forthcoming stimulus checks directly after the passage of the $2 trillion dollar deal by Congress. I am providing this update to correct an initial error and to provide additional details from the excellent written analysis performed by Yahoo.
So, just a few hours ago, it became official -- the largest governmental aid package in the history of mankind was passed. It will now make its way to President Trump, who will sign it into law with the quickness.
This $2 Trillion (That's $2,000,000,000,000, by the way) is massive. To put it into perspective -- the Omnibus Spending Bills of both 2018 and 2019, which is the budget for the ENTIRE federal government, have been right around $1.4 trillion, and that bill covered the entire budget of the US Military. If that doesn't put the size into perspective, understand this .....it's 10% of our entire GDP.
Direct payments to individuals has been the only method presented that guarantees the funds for citizens make it into their hands. The bill provides a total of $250 billion set aside for direct payments.
Okay, okay...Let's Break Down Who Gets What and When
1. Individuals will receive $1,200.
2. Married will receive $2,400.
3. Add an additional $500 per child 17 and under.
There are income limits imposed on the bill,in an effort to promote fairness and to save money at the same time. For instance, CNN points out that the bill will have language directing the "phasing out for individuals with adjusted gross incomes of more than $75,000. The amount would then be reduced by $5 for every additional $100 of adjusted gross income, and those making more than $99,000 would not receive anything." If you want to read the entire CNN story, click here.
All of the individual assistance comes from a $250 billion fund set aside for direct payments to individuals.
The next question is not a matter of what or how much, but is a matter of when the payments have been made. An algorithm will have to be tweaked to identify taxpayers that qualify and weed out the ones who do not. This is a massive effort.
So what is the White House saying?
The President and his administration have publicly floated an April 6 date for the payments to go out, but experts across the board are skeptical of the IRS's capability to do this. Past stimulus programs have taken much longer to make it into the hands of everyday Americans. Most experts seem to think it will take until May for us to get the money in hands, which could end up being catastrophic for many.
But this is not the end of the assistance for individuals. Here is a detailed explanation of other assistance available to individuals as a part of this package:
UNEMPLOYMENT INSURANCE: In addition to regular unemployment benefits (UI) administered by each state, Pandemic Unemployment Assistance (PUA) will expand the types of workers who are eligible to apply, extend the duration of time a recipient may receive unemployment benefits, and beef up the typical maximum dollar amounts for unemployment payments. The duration of unemployment benefits is extended by 13 weeks, on top of the number of weeks previously provided according to each state’s rules, which often permit around 26 weeks. For four months, unemployment benefits are also enhanced by $600 per week.
The changes mean freelancers, gig economy, and self-employed workers who are normally not eligible for unemployment insurance benefits will become eligible. Some lower-income workers will also be able to maintain their full salaries under the program if forced out of work as a result of the pandemic. States are required to ensure that applicants can apply for benefits in one of three ways: in person, by phone, or online. Learn more.
WHO’S ELIGIBLE: employees, freelancers, gig economy workers, self-employed
TIMELINE: The enhanced duration applies to claims for unemployment beginning on or after January 27, 2020 and ending on or before December 31, 2020
PAID SICK LEAVE: The “phase 2” bill passed in mid-March provides full-time employees of small- and mid-size businesses (those with fewer than 500 employees, and conditional exceptions for companies with fewer than 50 employees) with 80 hours of paid sick leave, and part-time workers paid-sick leave for a number of hours equal to the number of hours the employee works on average over a 2-week period. Payments are equal to 100% of an employee’s usual compensation, capped at $511 per day. Learn more.
WHO’S ELIGIBLE? U.S. employees of small- and mid-size firms who have worked at the company for at least a month and are unable to work or telework due to COVID19. Paid sick leave does not require that an employee is or becomes ill and may be used in addition to paid family leave. Employees who are instructed to remain at home to abide by a company’s social distancing rules are eligible.
Parents of minor children who cannot work or telework because of child care duties caused by school closures may apply for paid sick leave, in addition to paid family leave. The Labor Department has discretion to permit employers with fewer than 50 employees to opt out of the mandate if making such payments to employees would “jeopardize the viability of the business as a going concern.” Employers with 500 or more employees are exempt, and employers of healthcare workers and emergency responders may elect to exclude employees.
PAID FAMILY LEAVE: Provides up to 12 weeks of paid family leave at two-thirds of an employee’s usual rate, capped at $200 per day. Employees who work for small- and mid-size businesses will be eligible if they need to quarantine, care for a family member, or care for a child at home because their school is closed. Learn more.
WHO’S ELIGIBLE? U.S. employees of small- and mid-size firms who have worked at the company for at least a month and are unable to work or telework due to COVID19. The Labor Department has discretion to permit employers with fewer than 50 employees to opt out of the mandate if making such payments to employees would “jeopardize the viability of the business as a going concern.” Employers with 500 or more employees are exempt, and employers of healthcare workers and emergency responders may elect to exclude employees.
STUDENT LOANS: The Department of Education is permitting borrowers with federal student loans to defer payments, penalty free, until September 30, 2020. Non-defaulted borrowers who hold federal student loans will automatically have their interest rates set to 0% for a minimum of 60 days, under already adopted legislation. The option to suspend student loan payments requires borrowers to request such relief from their loan servicer(s). In addition, the Department has stopped all requests to the U.S. Treasury to garnish money from the paychecks, federal income tax refunds, and Social Security payments from defaulted borrowers.
Garnishments that had been in the process of being withheld from March 13, 2020 will be refunded, totaling about $1.8 billion to more than 830,000 borrowers. The Department says it expects the number of borrowers who will benefit from the offset relief to increase. The Education Department has further instructed private collection firms that it employs to collect on defaulted student loans to “halt all proactive collection activities,” including making phone calls to borrowers and issuing collection letters and billing statements. A temporary exclusion has also been put in place to permit tax filers to exclude employer-paid student loan payments from income.
WHO’S ELIGIBLE: Federal student loan borrowers in repayment, eligibility varies for those in good standing versus those in default. Learn more.
TAX RELIEF: The tax filing deadline has been changed from April 15 to July 15. The U.S. Treasury and IRS have also extended the due date for certain federal income tax payments that would have been due on April 15, to July 15. Individual and other non-corporate filers may defer up to $1 million of income tax payments that would have been due April 15. No penalties or interest will be assessed or collected for such deferred payments. Gig workers and those who are self-employed are eligible to receive paid sick leave benefits in the form of a tax credit. Charitable donation deduction caps for individuals will also be increased. Learn more.
WHO’S ELIGIBLE? All U.S. tax filers.
MEDICARE & MEDICAID: COVID-19 lab tests (with no out of pocket costs), medically necessary hospitalizations (including quarantine), qualifying vaccines if vaccines become available, telemedicine. Learn more.
WHO’S ELIGIBLE: Those who are covered by Medicare and/or Medicaid.
FOOD ASSISTANCE: Additional funding to the federal government’s Supplemental Nutrition Assistance Program (SNAP), previously referred to as "food stamps," is bolstering funds available to low-income households to assist with food purchases. Learn more.
WHO’S ELIGIBLE? SNAP eligibility is determined at the state government level. States calculate eligibility based on cash available and income level.
RETIREMENT ACCOUNT WITHDRAWS: Permits penalty-free withdrawals from retirement accounts up to $100,000 for funds needed to address COVID-19-related issues.
WHO’S ELIGIBLE? Retirement account holders.
What About Small Businesses that Are At-Risk of Going Under?
In the end, it appears as though there will be around $350 billion in funds to keep small businesses afloat during the pandemic. These funds will be made available in the form of loans, and the Small Business Administration will be responsible for the administration of such loans. Later, so long as the borrower meets specific criteria, the loan amount will be forgiven.
Here are the details for small, medium, and large businesses:
ASSISTANCE FOR SMALL- & MEDIUM-SIZE BUSINESSES
PAYCHECK PROTECTION PROGRAM: Provides 8 weeks of cash flow assistance up to $10 million to small businesses through 100% federally guaranteed no and low-interest loans that are eligible for forgiveness, under circumstances described below under “loan forgiveness.” Funds may be used for payroll wages and benefits, rent, mortgage payments and utilities, all of which is eligible for loan forgiveness. Loans will be accessible by applying through SBA-approved banks, credit unions and other lenders. Learn more.
The program also provides low-interest loan financing through banks and other lenders for mid-size businesses. Lenders participating under the mid-size business program must maintain an annualized interest rate at or below 2%, and assess no interest during the first 6 months of the loan.
WHO’S ELIGIBLE: U.S. business owners in all U.S. states, Washington D.C., and territories — including sole proprietors, independent contractors, self-employed, nonprofit organization, or veterans organizations — with 500 or fewer employees, which retain their workers, or rehire workers already laid off due to COVID-19, are eligible for the small business cash flow assistance. Mid-size business emergency loans are available to companies with between 500 and 10,000 employees that use funds to retain at least 90% of their workforce, at full compensation and benefits, until September 30, 2020.
TIMELINE: Treasury Secretary Mnuchin says additional funds from this week’s bill could begin processing by next week, with some approvals beginning to take place already.
EMERGENCY GRANTS: Advance of $10,000 within three days, to provide paid sick leave, maintain payroll, and other debt obligations. Expedites access to capital through the SBA’s Economic Injury Disaster Loan (EIDL) Program. Learn more.
WHO’S ELIGIBLE: U.S. business owners with 500 or fewer employees
LOAN FORGIVENESS: Distributions of federally-guaranteed small business loans that are used for payrolls that include employee salaries, cash tips, paid sick leave, insurance premiums, mortgage payments, utilities, and other debt obligations will be forgiven.
WHO’S ELIGIBLE? U.S. business owners in all U.S. states, Washington D.C., and territories with 500 or fewer employees who retain their workers, or rehire workers laid off due to COVID-19.
LOAN RELIEF: Provides 6 months of loan forbearance for principal, interest and fees on already distributed SBA loans.
WHO’S ELIGIBLE? Businesses with 500 or fewer employees that are current debtors on an SBA loan.
INCOME TAX RELIEF: The tax filing deadline has been changed from April 15 to July 15. The U.S. Treasury and IRS have also extended the due date for certain thresholds of federal income tax payments (including self-employment tax) that would have been due on April 15, to July 15. Small business filers may defer up to $1 million of income tax payments that would have been due April 15. New deductions for business improvements will become available, in addition to increased caps on allowable business interest deductibility and operating losses. Learn more.
PAYROLL TAX RELIEF: Provides two immediately refundable, dollar-for-dollar payroll tax credits for costs associated with providing coronavirus-related paid and sick leave to employees under the Families First Coronavirus Response Act.
WHO’S ELIGIBLE? Small and mid-size employers.
ASSISTANCE FOR LARGE CORPORATIONS
LOANS & GRANTS: The “phase 3” bill includes a $454 billion fund for a new lending and grant agency to help distressed corporations, with an additional $46 billion earmarked for the passenger and cargo airline industries. $17 billion of the fund will go to assist companies vital to national security. A new “Office of the Special Inspector General for Pandemic Recovery” will oversee the money that is disbursed.
TAX RELIEF: The tax filing deadline has been changed from April 15 to July 15. The U.S. Treasury and IRS have also extended the due date for certain thresholds of federal income tax payments (including self-employment tax) that would have been due on April 15, to July 15. Corporate filers may defer up to $10 million of income tax payments that would have been due April 15. Learn more.
FINANCIAL REPORTING: Public companies impacted by coronavirus may be eligible for an extension to file regulatory filings with the U.S. Securities and Exchange Commission (SEC). Companies with filings due on or by July 1 may be granted an extension depending on the SEC’s evaluation of its specific circumstances. The SEC also granted 45-day extensions on filings due between March 1 and April 30.
What Do I Need to Do to Make Sure I Get My Check?
That's the great part....you don't need to do anything else. So long as you filed a tax return last year, you will get a check. If you filed your taxes this year already, your check will be based off of this year's number; but if you have not yet filed your 2019 return, your check will be based off of last year's return. It's that simple.
If you are a business entity, you can access assistance by going to the Small Business Administration's intake and information site at www.disasterassistance.gov.