Congress passed a law designed to accelerate the process of helping the entire American economy. It is needed to keep businesses and individuals afloat during the unprecedented “freeze” of life in the country.
Senate majority leader Mitch McConnell called the law, known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a necessary emergency aid.
“No economic policy can completely end hardships if public health requires us to freeze so many of our businesses,” McConnell said in a speech to a Senate meeting last week. “This is not even an incentive package. It’s an emergency aid package. This is emergency aid. This is what it is.”
The law includes several elements designed to help people get involved in the economy. They include direct cash payments for many, as well as expanded unemployment benefits and new rules for things like filing taxes.
Most people earning less than $75,000 a year can expect a lump sum payment of $1,200. Couples will receive $2,400 if their combined income is less than $150,000 and families will receive an additional $500 per child.
The lump-sum is reduced by $50 for every $1,000 of income above this level. And it does not apply at all if the person earns more than $99,000 and the couple earns more than $198,000. Even if the income is $0, the right to pay is retained. The main thing for the recipient is to have a tax return, a social security number and no dependent status.
Tax returns for 2019 or 2018 (if 2019 has not yet been filed) are taken into account when determining entitlement to payment. People who receive social security benefits but do not file a tax return are also entitled to receive the benefit – the verification of their eligibility will be based on information provided by the Social Security Administration.
How to get the money – The check will be based on information provided by the Social Security Administration.
For most Americans, no action is required. The IRS will use the most recent tax or social security records to provide payment to Americans either by direct deposit (if available) or by paper check by mail to the last address listed on the records.
The money will arrive in bank accounts more quickly than by mail in the form of cheques.
The Treasury will develop a web portal for individuals to submit their banking information to the IRS online. Taxpayers will be able to receive payments immediately rather than cheques by mail.
Payments for dependants
The CARES Act uses the Child Tax Credit (CTC) qualification standards. All eligible children under the age of 17 who have not covered more than half of their expenses and have lived with a taxpayer for more than 6 months are eligible to participate.
This means that adult dependents, such as college students 17 years of age or older and older people, are not eligible for the $500 payment. Adult dependents are also not entitled to their own payment from the government.
The law does not provide for a maximum number of children for which payment may be made. But each of them must be declared by the taxpayer on the tax return.
For divorced parents: only the one for whom the child is registered as a dependant is entitled to the payment.
Additional unemployment benefits.
The CARES Act makes major changes to unemployment benefits, increasing benefits and expanding the range of persons eligible for them. The United States will continue to pay unemployed people who are eligible for it. This varies from state to state, as does the amount of time people are allowed to receive the money.
The law adds $600 per week from the federal government over and above the basic amount that an employee receives from the state. For example, if an unemployed person receives on average about $340 per week, the new federal program will pay $940.
The law also adds 13 weeks of unemployment insurance, which is the payout period. People approaching the maximum number of weeks allowed by their state will receive an extension. New applicants will also be allowed to receive benefits for a longer period.
Conditions for participation in the program:
The applicant is not eligible for unemployment benefits in other states or federal districts;
the recipient is unemployed, partially unemployed or unable to work due to a COVID-19 public health emergency (and can confirm this);
the applicant is not eligible for a paid leave of absence.
As a general rule, self-employed people, freelancers and contractors cannot apply for unemployment benefits. They can now. The new law creates a new temporary assistance program until the end of this year to help people who lose their jobs if it is the direct result of a public health emergency.
To receive the benefit, you must apply to the State Department of Labor.
Some people have not filed their tax returns for 2019, but that’s okay. The deadline for filing applications has been extended to July 15, 2020.
The law requires that all private insurance plans cover COVID-19 treatment, vaccine, and coronavirus testing.