First, I hope this finds you healthy and safe. I know these are tough and unprecedented times but I want you to know that I’m in this with you.
With that said, we are welcoming the largest economic stimulus package in our country’s history! 2 Trillion Dollars worth of aid!!
Questions on how this benefits you directly? To help make sense of everything - I’ve broken down the Stimulus Package into 3 Parts. You will see the headlines for each blog just like directly below so you can scroll to the sections that interest you. This bill is near 900 pages and contains a lot of details!
Okay, here we go!
Part 1 Stimulus Bill:
Government Sending Money
Tax Due Dates Extended
Student Loan Payments
Employer Student Loan Contributions
Unemployment Expanded
STIMULUS MONEY | YOUR BENEFITS EXPLAINED
Stimulus checks are coming! Know how much to expect and what additional benefits apply to you.
* An additional $500 will be given for each qualifying child under the age of 17
*Head of Household starts phasing out at $112,500
Your income (adjusted gross income) will be taken from your 2018 or 2019 Tax Return whichever is your latest tax return you filed. This is line 7 of your 2018 Tax Return or Line 8b of your 2019 tax return.
It will be “trued” up based on your actual 2020 tax return. So if you don’t qualify with your 2018/2019 tax return, but you qualify with your 2020 tax return because you were laid off or your income went down this year you will receive a tax credit next year when you file. This makes a lot of sense when you probably need the money now!
This money will not be taxable
The IRS is qualifying you based on your latest filed tax return - 2018 or 2019. If you qualify with your 2018 tax return, receive the check, then file 2019 and don't qualify, don't worry - there are no clawbacks (basically the IRS is saying you won’t have to pay it back).
When is the money coming?
No date set yet, but it’s likely to be at least a month. The IRS is aiming for three weeks.
How will you receive the money?
Able to go to the bank account your 2018/2019 refund was deposited to, alternatively, it will be sent to the last known address on file for you.
Is your IRS information out of date?
In the coming weeks, the Treasury plans to develop a web-based portal where you can provide your banking information to the IRS online so you can receive money via your bank account rather than have to wait for a check in the mail.
Some Planning Advice:
If your 2018 tax return will qualify you, but your 2019 tax return won’t - wait to file your 2019 tax return if you need the money.
If you made less in 2019 than 2018 and will qualify based on your 2019 tax return get your 2019 tax return filed ASAP.
Updated 4/15/20: You can check your payment status here <IRS Get My Payment
See this link for where the IRS is updating information about these checks: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
Updated 4/13/20: IRS launches Economic Stimulus Package Portal for Non-Filers (those who don’t need to file a tax return due to low income).
TAX DUE DATES - EXTENDED
Federal Filings - now due 7/15
State Filings - many are following CA, AZ etc.
Look into this TurboTax blog for a full line-out.
Q1 Estimated Tax Payment - now due 7/15
Q2 Estimated Tax Payment - now due 7/15 (updated on 4/10/20)
STUDENT LOANS
Federal Student Loans - deferral of student loan payments through September 30th, 2020!
No interest will be accrued during this time!
If you are on an income-driven repayment plan (REPAYE, PAYE etc.) this period will still count towards your student loan forgiveness!!
Payments will be automatically suspended. However, I do recommend you log-in and confirm next month that the money was not taken out or stop your payments.
Townsend Tip:
IF you are going for student loan forgiveness, lost your job/ your income has greatly reduced or you don’t have your emergency savings - 100% pause payments!
IF you are lucky and your income has stayed relatively the same, you have your emergency savings fully funded during this time and you don’t have high-interest debt (credit cards), AND you aren’t going the forgiveness route I would recommend you to continue making your student loan payments. Why? Because if interest isn’t accruing on them you can pay them down even faster and be debt-free SOONER. YES!
Please note - This payment deferral does not include private student loans. If you are struggling to make payments on your private student loans call your institution.
EMPLOYERS PAY FOR YOUR STUDENT LOANS
Excluded from your Income! Untaxed!
Historically, your employer could provide $5,250 tax-free for education-related costs - college, graduate school, etc.
Now it has been amended for this year that your employer can give you up to $5,250 to pay down student loans and it will be excluded from your income! Aka tax-free! Only applicable for this year (2020). This has to be coordinated with the regular $5,250 limit for tax-free education so you can’t get the $5,250 for school and then $5,250 for student loans. It’s $5,250 in total.
Townsend Tip:
Getting a bonus this year and plan to put it towards paying off your student loans? Ask your employer to give it to you for your student loans so you don’t have to pay taxes on your bonus and way more goes to your student loans so you get out of debt even quicker!
UNEMPLOYMENT EXPANDED
Unemployment Insurance Increased & Expanded to include Self-employed Gig Economy Workers, 1099 Contractors
If you have lost your job or your income has been reduced there have been some very positive changes with this bill related to unemployment.
No more waiting period to get unemployment funds- normally you had to wait a week, but not anymore. It has been eliminated for 2020 with this bill.
Maximum Benefit Increased - add’l $600 more a week can be received for 4 months
The typical unemployment check in this country is $380 a week on average. Now think about adding $600 a week (not a month) to that! That is more than doubling unemployment insurance. This is a HUGE bonus for unemployment!
Extension of benefits to 13 extra weeks (state benefit) in addition to the normal 26 weeks - that is nearly 10 months!
Unemployment has been expanded to include payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, partially unemployed, gig economy workers) who are unable to work due to the coronavirus public health emergency.
You apply through your state. If you have lost your job or your income has greatly reduced I recommend you apply asap.
Normally unemployment is a state benefit, but the federal government is offering states these benefits + funding and I can’t imagine states not taking advantage of this. States are currently catching-up with this new legislation and waiting for money from the government so stay tuned!
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I hope you found this recap helpful and that this series serves as a resource of information during this time. If you need to set up a time to go over your own specific situation, an hourly rate is available, let's set up a time.
For more tips and info, follow along on Instagram and LinkedIn. I'm here to help guide you through this, we are in this together!
