Coronavirus Relief Package
What to expect from the government stimulus program
The U.S. Government passed the coronavirus relief bill into law last week and yes, there’s a lot to take in. The good news is that this bill was passed for you. The government created this $2 trillion relief package in order to do two things. One, to put money in the pockets of individuals. Two, to get that money back into the economy to keep it moving during a time when everything else has slowed.
We’ve broken it down for you so that you have a greater understanding of what you can expect.
The why. People are out of work. The world is feeling the impact from coronavirus. The government wants to make sure Americans have enough money to get through the crunch, even if they have to do it in a bare bones way. Many people do not have the emergency fund they should, and even those who are out of work still have plenty of bills to pay. The CARES Act (which stands for Coronavirus Aid, Relief, and Economic Security Act) is essential, says Colin Slabach, Assistant Professor of Retirement at The American College of Financial Services, to keep Americans safe and to ensure they can pay those bills.
The checks. Treasury Secretary Steve Mnuchin says he expects most to get their checks by April 17, per the New York Times.
- Singles earning up to $75,000 per year will get a check of $1,200.
- Married couples filing jointly who earn up to $150,000 will get a check of $2,400.
- Heads of households will get the full $1,200 if they earn up to $112,500 per year.
- Each family will receive an additional $500 per child under the age of 17.
- Payments start to decrease for singles earning $75,000 and up to $99,000. For married couples, the payments decrease starting at earnings of $150,000 and up to $198,000. The payment will decrease by $5 for each additional $100 in earnings.
- Payments stop at earnings of $99,000 and $198,000 respectively.
But how? The money will be direct deposited into the bank account where you received your most recent tax refund. If you do not have a bank account, your check will be mailed to the address used with your most recently filed tax returns — but it will take longer to receive than those that are direct deposited. If you haven’t gotten around to filing for 2019 yet, the government will pull from your 2018 returns.
Will it be counted as taxable income for 2020? No, the economic impact payments are not considered taxable income.
What else do I need to know?
The stimulus bill includes almost $350 billion in new loans for small businesses — which can become grants (i.e. be forgiven) in some cases. Here’s how it works. The owner of the business must apply for the loan with a lender approved by the Small Business Administration. Once the owner gets the loan amount, if they continue to pay their employees for eight weeks, the portion of the loan equal to eight weeks’ pay for all of the business’s employees will be forgiven and will not be considered taxable income for 2020. Money from the loan also used for rent or mortgage and utilities will also be forgiven, but only if the employer continues to employ and pay their workers for that same eight-week period.
Federal student loan payments are now suspended until September 30, 2020. For the next five months, borrowers have the option to stop federal student loan payments if they choose to do so. No interest will accrue on the loans during this time. If borrowers do choose to continue payments, there will be a 0% interest rate on all payments until September 30, per Forbes.
If you have lost your job or have been furloughed, the stimulus bill is allocating federal funds to help you out, too. Unemployment benefits have been extended by an additional 13 weeks. Once you successfully file for unemployment, and figure out what state benefits you are eligible for, the federal government will add an additional $600 per week on your payments for up to four months.
Who is FIBT?
First International Bank & Trust (FIBT) is a full-service, family-owned, independent community bank serving a wide range of communities across North Dakota, South Dakota, Minnesota, and Arizona.