Who C.A.R.E.S.? You Should

The money is about to start flowing.

And not a moment too soon.

The COVID-19 virus has delivered a shock to the world economy the likes of which has not been seen in a long, long time. Businesses are shut down and individuals are staying at home. A national economy that was humming on Valentine’s Day did a face plant by April Fool’s Day.

In response, Congress just passed the Coronavirus Aid, Relief and Economic Security Act (or C.A.R.E.S. Act), which will provide about $2 trillion in economic relief. That’s about 10% of the entire gross domestic product of the US, a staggering number. 

Here are a few high points relevant to individuals and small business owners.

Tax returns / payments. Prior to the passage of the CARES Act, the US Treasury announced that both income tax returns and payments due April 15, 2020, would automatically be extended to July 15, 2020. No extension forms need to be filed.

Money for individuals. Many Americans will receive direct payments of $1,200, or $2,400 for joint filers, plus $500 for each qualifying child. Generally speaking, these payments will come to individuals making $75,000 or less (or combined if filing jointly). If you make more than $75,000, the amount will be reduced, ultimately to $0 if you make more than $99,000 per tax payor. The payments will not be taxed. There’s no need to apply for this money.

Money if you are unemployed. Unemployment benefits are increased by up to $600 per week, on top of what the state already pays. Part-timers and the self-employed may also qualify. You can file for unemployment at http://www.louisianaworks.net/hire

Retirement account changes. The 10% early withdrawal penalty is waived for “coronavirus-related distributions” taken in 2020 up to $100,000 per individual across all company-sponsored plans and IRAs.

You qualify for a “coronavirus related distribution” if you, your spouse, or dependent have a diagnosis of COVID-19; or you been financially impacted by related issues.

Any distributions you take out are still taxable, but you get to spread payment of that tax evenly over the next three years. 

They’re also giving you three years to roll the funds back into the plan or IRA.

Student loans. All payments on student loans have been suspended until September 30, 2020. Interest will not accrue during this period. 

Money for small business. The federal government is providing financial relief through multiple programs. The first is…

Paycheck Protection Program (PPP). Small businesses (500 or less employees) and non-profits may apply for a loan equal to eight weeks of payroll costs. That includes payroll, benefits, rent, utilities, and interest on mortgages. If the employer keeps everyone on the payroll (more or less), the loan will be forgiven. It will be free money, also tax-free. Business owners should apply through their bank or other lenders eligible to make SBA loans. The second program is…

Economic Injury Disaster Loan (EIDL). EIDLs are lower interest loans of up to $2 million designed to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. Principal and interest payment on these loans may be deferred for up to 4 years depending on your circumstances. These loans may be amortized for up to 30 years. 

We’ve not seen government intervention on this scale since World War II. 

If you are working and your income has not changed, all this may seem excessive. But if through no fault of your own, you’ve been quarantined from work (not to say normal social contacts), this lifeline may be your only hope of economic survival. 

Let’s all watch out for one another, continue being safe, and focus on things for which we can be grateful. 

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information at http://www.ruston.argentadvisors.com/important-disclosure-information

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