How Does the Coronavirus Stimulus Package Impact You?
When the coronavirus began spreading rapidly across the country, immediate action was needed to help individuals, families and businesses impacted by it. The Coronavirus Aid, Relief and Economic Security Act (CARES) was a $2 trillion stimulus package designed to do exactly that. Most people should have received their allotted IRS payment of $1,200 for an individual, $2,400 for people married filing jointly and $500 per qualifying child in the household. These payments were based on your most recent tax filing. And if you have not yet filed your 2019 taxes, then you may receive a tax credit with your 2020 tax return to ensure you receive the proper amount. Here are some other ways the coronavirus stimulus package may impact you.
Unemployment Payments And The Paycheck Protection Program
The dollar amount of unemployment payments increased by $600 per week through July 31, 2020. The qualifications for unemployment has also expanded temporarily to help people who previously may not have qualified, like freelancers, part-time workers, independent contractors and self-employed workers. The Paycheck Protection Program was also implemented to help small businesses with less than 10,000 employees keep the majority of the workforce on the payroll with benefits. If you lost your job or had to temporarily close your business due to the coronavirus pandemic, these aspects of the CARES Act may be the most impactful for you.
No Penalties On Early Retirement Withdrawal
Typically individuals have to pay a 10% penalty for withdrawing funds from their retirement plan before reaching the required age. However, this penalty is waived for up to $100,000 of funds withdrawn as long as you qualify as being impacted by the coronavirus. The qualifications include:
- You or someone in your household is diagnosed with the coronavirus
- Experiencing financial hardships due to the inability to work
- Reduction in hours worked as a result of the coronavirus
- Inability to work due to child care closures
Are Stimulus Payments Made If No Tax Return Is Filed?
If you don’t file a tax return due to only having disability income, social security retirement or railroad retirement benefits, you may still qualify for an IRS payment through the CARES Act. The IRS payment will come via the same method you use to get your regular checks, either by mail or direct deposit. The same goes for anyone who only received Veteran Affairs benefits and don’t file a tax return as a result.
Tax Credits For 2020
Your tax situation may have changed this year compared to your most recent tax return filed. Since the IRS payment is made based on your last-filed tax return, you may not receive a portion of your stimulus payment if you recently had a child, were removed as a dependent from someone else’s tax return or other circumstances. However, you may still get tax relief on your 2020 taxes in the form of a credit for the amount you should have received.
Rocket Tax is here to help you understand exactly how the CARES Act impacts you directly. Everyone has been impacted differently, so contact us today to see how we can help you get the most tax relief possible before the tax deadline.