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CARES Act: Key Points for Individuals

CARES Act: Key Points for Individuals

May 04, 2020

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) is sweeping federal legislation put in place to provide financial support to businesses and individuals during the coronavirus (COVID-19) pandemic.

We are here to help you understand some key terms of this federal support package that may help you and your family.

Key provisions of the CARES Act for individuals include:

  • Assistance for workers and families — Provides a $1,200 direct payment (processed as an advanced tax credit for 2020) for single and head of household filers ($2,400 for joint filers) for those with a 2019 adjusted gross income of $75,000 a year or less ($112,500 for heads of household and $150,000 for joint filers), plus $500 per qualifying child, with phase-outs for higher income levels after that.

  • Unemployment insurance provisions — Creates the Pandemic Unemployment Assistance program through December 31, 2020, to provide payments under certain situations to individuals traditionally not eligible for unemployment benefits, including the self-employed, independent contractors, and those with a limited work history.

    • Creates the Federal Pandemic Unemployment Compensation program, to provide an additional $600 per week to each recipient of unemployment insurance or Pandemic Unemployment Assistance, for all weeks of unemployment between April 5, 2020 and July 31, 2020.

    • The Pandemic Unemployment Emergency Compensation provision will provide an additional 13 weeks of unemployment benefits through December 31, 2020, to help those meeting certain requirements who are able to, available for and actively seeking work, but still remain unemployed after having exhausted state unemployment benefits (typically 26 weeks), up to a maximum of 39 weeks.

  • IRA contribution deadline — Extends deadline to July 15, 2020, to match the extended federal income tax filing deadline.

  • Student loan provisions — Suspends student loan payments (principal and interest) through September 30, 2020, without penalty to the borrower, for federal student loans.

  • Charitable giving — Allows taxpayers who do not itemize a deduction of up to $300 for cash contributions to certain charities for 2020. For those that itemize, the Act increases the limit on charitable contributions from 60% of their adjusted gross income to 100% for 2020.

  • Required Minimum Distributions (RMDs) waived — Waives RMDs for 2020 with respect to qualified defined contribution plans, 403(b) plans, 457(b) plans and IRAs.

  • Withdrawals and loans from qualified plans and IRAs — Permits distributions up to $100,000 and waives the 10% early distribution penalty for those facing specific hardships from COVID-19. The Act also increases the maximum loan amount to $100,000 and delays the repayment date for outstanding loans that would otherwise be due in 2020.

We have highlighted some key provisions of the CARES Act affecting individuals, but there are many other provisions not covered in this resource.

It is also important to note that the assistance offered is subject to the rules and conditions stipulated by the federal government, for which further guidance is expected over the coming weeks.

Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2020-99190 (04/22)