On Thursday, the government reported that 3.3 million Americans applied for jobless benefits in a single week. Yes, you read that right. One week. 3.3 million Americans now jobless. This is by far the largest number in history. Previously the record was just under 700,000 in a single week in 1982.
For those affected by this, there is some good news. Let’s dive right in.
All Americans with adjusted gross income (this can be found on line 8b on your 2019 federal individual income tax return; or line 7 on your 2018 tax return) up to $75,000 ($150,000 if married), who are not a dependent of another taxpayer and have a work eligible social security number, are eligible for the full $1,200 ($2,400 if married) rebate. In addition, they are eligible for an additional $500 per child. This is true even for those who have no income. These rebates will be based on your 2019 tax return, if filed, or your 2018 tax return.
The rebate amount phases out by $5 for each $100 that a taxpayer’s income exceeds $75k ($150k married) and completely phases out at $99k for single filers, $146,500 for head of household filers with one child, and $198k for joint filers with no children. If neither 2019 or 2018 tax returns are filed, reach out to me and I’ll help you get that squared away
As a reminder, tax day has been moved from April 15th to July 15th. This gives everyone 90 extra days to file and pay their taxes to the government, with no additional penalties or interest on unpaid balances. Did I just hear a “hooray”? Oh, just me…
$1,200 not enough for even half of your rent or mortgage? Another great benefit is that the 10% penalty on early withdrawal of funds from a qualified retirement account is waived during 2020. So long as the funds are used to help you pay your rent, mortgage, or health care (not to buy a new jet ski). I’d suggest taking a loan from your 401k versus a distribution. You have 60 days to put the amount of your withdrawal back into your account for it not to count as a distribution, but on day 61, you can’t get that money back in. There is interest on 401k loans, but you’re paying yourself back over time, not a bank. Shoot me a message if you want to get in the weeds with retirement account options. Have student loans? There’s magic in this for you too. All student loan payments (principal & interest) are deferred for 6 months, through September 30, 2020, without penalty to the borrower for all federally owned loans. Currently, FFEL Program loans and some Perkins Loans do not qualify for this deferment. If you do not know who your servicer is or how to contact them, visit StudentAid.gov/login or call them at 1-800-4-FED-AID (1-800-433-3243) to find out if your loan is eligible. Relief on existing installment agreements For taxpayers under an existing installment agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances. Be more charitable Prior to the CARES Act, an individual taxpayer was only allowed to deduct charitable contributions if they itemized their deductions. To encourage Americans to contribute to qualified charities (Click here to donate to my favorite, St. Jude), the act permits taxpayers to deduct up to $300 of cash contributions, whether they itemize their deductions or not.
Steps you can take today Ensure that, at least, your 2018 tax return has been filed and that your current address is up to date with the IRS. If you use direct deposit, ensure your banking information is up to date. They will likely start processing and paying Americans their stimulus checks over the next couple of weeks.
I’d love to be a resource for you as we navigate this pandemic. Please reach out to me at firstname.lastname@example.org for further questions or clarification.
God bless! AZ