Feeling overwhelmed by the news lately? We don’t blame you. It seems every day brings a batch of headlines that impact our lives in significant ways, but information changes so quickly, it can be hard to keep up. So, we’ve compiled the important news for your household into this post, which we’ll update as details evolve.
Here are the recent headlines that could affect your household most.
The Federal and state tax deadlines have been extended. All individuals and business entities now have until July 15, 2020 to file tax returns and make payments. This was announced by the State of California Franchise Tax Board on March 18 and the Internal Revenue Service on March 21.
You can defer mortgage payments. On March 25, Governor Gavin Newsom announced that four of the nation’s five largest banks have agreed to defer mortgage payments for California families impacted by COVID-19. Wells Fargo, Citi, JP Morgan, and US Bank as well as nearly 200 state-chartered banks and credit unions will waive payments for 90 days, and Bank of America will waive them for 30 days.
Federal student loan payments have been suspended. You can defer Federal student loan payments until Sept. 30, 2020 without accruing interest. This presents a unique get-ahead-if-you-can opportunity because if you’re able to keep making payments during the interest-free timeframe, you’ll chip away at your loan principal quickly.
You do not have to take a required minimum distribution for 2020. On March 27, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. One aspect of this $2 trillion stimulus package is you can defer required minimum distributions from qualified retirement accounts. That’s a big benefit if the amount and tax calculated at the end of 2019 were much higher than your account values today.
Most Americans will receive a direct payment from the government. Individuals and families will get cash in their pockets as a part of the CARES Act. The amount depends on your income at the time of filing your most recent tax return, but couples who make less than $150,000 and have two children will receive a payment of $3,400. Individuals who make $75,000 or less will receive $1,200.
You have access to paid sick leave. If you’re unable to work due to quarantine, isolation, or coronavirus symptoms, employers are required to provide up to two weeks (80 hours) of paid sick leave at your regular compensation rate (up to $511 per day). This was effective April 1, 2020 under the Families First Coronavirus Response Act.
You have access to paid family and medical leave. If you’re unable to work from home and must care for someone in quarantine, isolation, experiencing coronavirus symptoms, or at home due to school closures, you can take up to 12 weeks of job-protected leave thanks to the Families First Coronavirus Response Act. If you’ve been with the company at least 30 days and work full time, you’re to be paid two-thirds of your regular rate for up to 10 weeks.
If you’ve lost your job, there are California companies still hiring. Grocery stores, delivery services, pharmacies, and others are in high-demand due to COVID-19. Here’s a list of Southern California companies that are staffing up.
Unemployment benefits have been expanded. The CARES Act enhances state unemployment benefits by adding $600 per week for four months and 13 additional weeks of benefits through the end of 2020. It also makes benefits available to self-employed “gig workers” and freelancers. Details can be found here about filing for unemployment in the state of California.
You can withdraw from qualified retirement accounts early without penalty. If all of the above support isn’t enough to alleviate your household’s financial burdens, the CARES Act enables you to take up to $100,000 from your retirement plans without penalty to weather the impact of COVID-19. Taxes are still owed on the withdrawal but can be paid over three years. You can also recontribute funds to the accounts during that time without contribution limits. This should be the last possible resort, however, and we’d love to talk with you about more advantageous ways to navigate financial hardships before going this route.
There’s no doubt we’re living in challenging and unusual times. However, there’s a lot of support available from Federal, state, and local government as well as private industries to ensure we all get through it – together. Let us know how Carey & Hanna can help.