Coronavirus Aid, Relief, & Economic Security Act

All levels of government across the country continue to take important action to address the growing impact of the COVID-19 pandemic.

Most recently, the President signed an historic $2 trillion COVID-19 economic relief package with overwhelming bipartisan support. This package includes several programs designed specifically for homeowners who may need help paying their mortgage or other bills.

Learn more about the benefits of this relief package below:

The U.S. government will be making one-time payments to adult Americans either via direct deposit or mailed checks to help people impacted by the shuttered economy.

  • Payments will be based on income reported on your 2018 taxes.
  • Amounts will be gradually decreased beginning with individuals who earn $75,000 or married couples filing jointly who make $150,000.
  • Households will also receive an additional $500 per child.
  • Individuals earning $99,000 or above and married couples earning $198,000 or more will not receive a check.

Read more: Your Guide To The Federal Stimulus Package, from Forbes for more information on unemployment insurance, paid sick leave and more.

Mortgages

  • Mortgage Forbearance – Borrowers of government-backed mortgages (Fannie Mae, Freddie Mac, HUD, VA and USDA) can request up to 360-day payment forbearance without proof of hardship. No additional fees, interest, or penalties can be assessed for the forbearance. Except for abandoned or vacant property, there may be no foreclosure actions for 60 days from 3/18/2020.
  • Owners of multifamily properties who were current on their mortgage payments as of February 1, 2020, and have federally insured, assisted, or supplemented loan (Fannie Mae, Freddie Mac, FHA or any loans backed or assisted by any branch of the federal government, including the Low-Income Housing Tax Credit) may request forbearance for 30 days due to financial hardship, with extensions of up to a total of 90 days. Borrowers receiving the forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.

Evictions and Foreclosure

  • Moratorium on eviction filings, or fees or penalties for tenants for nonpayment of rent for 120 days on properties insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, covered by the Violence Against Women Act of 1994.

Additional Assistance

  • $1.25 billion for Section 8 voucher rental assistance for seniors, the disabled, and low-income working families, who will experience loss of income from the coronavirus.
  • $5 billion for Community Development Block Grants to help communities and states address COVID-19.
  • $1 billion for project-based rental assistance to make up for reduced tenant payments as a result of coronavirus.
  • $50 million for Section 202 Housing for the Elderly to maintain housing stability and services for low-income seniors.
  • $15 million for Section 811 Housing for Persons with Disabilities to make up for reduced tenant payments as a result of coronavirus.

Credit Reporting

Speak to your creditors immediately if you are concerned you can’t make payments. If you make payment arrangements during the COVID-19 pandemic, your credit status will not change.

  • If furnishers (e.g. banks) provide an accommodation and the customer makes their payment or if no payment is required, then the furnisher must report customer as current.
  • If the customer was delinquent before the accommodation, but brings account current, then the furnisher must report customer as current.
  • Furnishers may maintain status of written off accounts.
  • These provisions apply from January 30, 2020 to 120 days after enactment of this bill or the end of the national emergency.

Student Loans

The Department of Education will allow forbearance — a temporary postponement of payments — on federally backed student loans.

  • Suspends all payment due on federal student loans for 6 months.
  • Interest shall not accrue on these during this forbearance.
  • For the purpose of loan forgiveness, loans will be deemed paid during the forbearance.
  • Prohibits negative credit reporting or involuntary debt collection during forbearance period.

Read more: Coronavirus and Forbearance Info for Students, Borrowers, and Parents, from the Department of Education.

Highlights – What the tax changes mean for you:

  • The filing deadline for tax returns has been extended from April 15 to July 15, 2020.
  • As noted above, individuals will receive cash payments from the federal government in the amount of $1,200 per adult plus $500 for each child under the age of 17. These payments should be sent out starting in April.
  • Individuals with retirement accounts, including IRAs, can take early withdrawals of up to $100,000 from those accounts without having to pay the 10% early-withdrawal penalty. Those who withdraw such funds can recontribute them to the plan over three years or can keep the money and pay the tax on the withdrawals over a three-year period.
  • Individuals aged 70 1/2 or older do not have to worry about taking required minimum distributions from retirement plans in 2020, or to pay the taxes on those distributions.
  • Individuals who make donations of up to $300 in charitable contributions in 2020 can deduct them whether they itemize or not.

More Details:
2020 Recovery rebates for individuals (Section 2201):

  • Tax credits are provided for individuals in the amount of $1,200 for single returns and $2,400 for joint returns
    • plus $500 for each child (under age 17 and qualifying for the child credit);
  • Credits are reduced by 5% of the excess of adjusted gross income (AGI) over these thresholds:
    • $75,000 for a single return;
    • $150,000 for a joint return; and
    • $112,500 for a head of household return:
      • Thus, the credits would be fully phased out for income higher than the following amounts:
        • $99,000 for a single person with no qualifying child;
        • $198,000 for a couple filing a joint return with no qualifying children;
        • $218,000 for a couple filing a joint return with two qualifying children;
        • $146,500 for a single parent with one qualifying child:
    • (in all cases, the level of income before the phaseout is complete increases by $10,000 per child).
      • For limitation purposes, AGI is based on the 2019 tax return, if filed.  If not, then AGI on the 2018 return would be the limit.
  • There is no income floor or phase-in – all whose income does not exceed the thresholds will receive the same amount.  Non-tax filers generally need not file a tax return to claim a rebate.
  • The credits are not available to anyone who can be claimed as a dependent on another’s return.
  • If a tax return has not yet been filed for 2019, the 2018 tax return will be the point of reference.  If no tax return was filed for either year, rebates can still be sent based on information on Social Security benefit statements.
  • The rebates are fully available to residents of U.S. Territories, including Puerto Rico.
  • The IRS will send out the payments electronically if any tax refund was sent in such a manner for the 2018 or 2019 tax return – also there will be a notice by mail to the last known address that the payment has been made electronically.  If not, a paper check will be sent.
  • No credit allowed if correct ID numbers (Social Security numbers) were not on tax returns, except in cases of spouses of active military personnel.

Special Rules for Withdrawals from Retirement Funds (Section 2202):

  • The 10% extra tax on early withdrawals from IRAs and qualified retirement plans shall not apply to distributions of up to $100,000 related to coronavirus:
    • These are distributions made in 2020 to an individual diagnosed with COVID-19 or whose spouse or dependent is diagnosed or who experiences adverse financial consequences as a result of being quarantined, furloughed, or laid off due to such virus or is unable to work due to lack of child care or closing or reduced hours of his or her own business.
  • Such amounts can be repaid to the retirement plan over a 3-year period;
  • If not repaid, the regular tax on the distribution can be paid over a three-year period;
  • Certain coronavirus-related loans up to $100,000 from defined contribution plans are not treated as distributions and the repayment of such loans is extended.

Temporary Waiver of Required Minimum Distribution Rules for Certain Retirement Plans and Accounts (Section 2203):

  • The required minimum distribution (which requires people who turned age 70 ½ in 2019 to include a portion of their IRA or other defined contribution retirement account in their income) is waived for 2020.

Allowance of Partial Deduction for Charitable Contributions (Section 2204):

  • For 2020, charitable contributions of up to $300 are deductible for those who do not itemize deductions;
  • Must be cash contributions to charities (but not to private foundations or donor advised funds).

Modification of Limitations on Charitable Contributions During 2020 (Section 2205):

  • The 60% of AGI limit for cash contributions is increased to 100% for charitable donations made in 2020. For corporations, the 10% of taxable income limitation is increased to 25%. For donations of food inventory, the limitation increases from 15% to 25%.
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