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The CARES Act Explained: Part 4 - Relief for Individuals and Households

With the recent legislation passed by the U.S. Congress in the form of the CARES Act, many C&N customers rightfully have lots of questions. Our experts have developed a series of helpful summaries to better explain the key things you need to know and the relief options that may be available to you.

In this fourth and final part of our series, we explain 6 provisions in The CARES Act aimed at helping American families and individuals:

1. Added Federal Unemployment Insurance (UI) Benefits

Some of the UI benefits in the Act may extend to the self-employed and independent contractors, two types of worker not typically covered by UI benefits. However, these benefits may not be available to those who can work remotely or already are receiving paid leave benefits, including those benefits available under the Families First Coronavirus Response Act. 

Many workers who would otherwise be excluded from receiving UI benefits now may be eligible, for reasons including (among others):

  • those forced to quit their jobs for COVID-19-related reasons
  • individuals whose places of employment closed or can no longer provide them work
  • the self-employed

Many States institute a one-week waiting period before unemployment compensation benefits are paid. If the State agrees to waive this one-week waiting period, the Federal Government will provide the funds to pay for the first week of UI benefits.

2. Non-Targeted Checks to Households

The CARES Act provides “rebates” in the form of cash payments of up to $1,200 per individual, $2,400 per married couple, plus $500 per child. Phaseouts begin at incomes of $75,000 for individuals and $150,000 for married couples. College students, seniors whose only income is from Social Security or veterans whose only income is a veterans’ disability payment are all eligible for the rebate as long as they’re not claimed as a dependent of another taxpayer. 

Any child who is a qualifying child for the purposes of the Child Tax Credit is also a qualifying child for the purposes of the recovery rebate. In general, a child is any dependent of a taxpayer under the age of 17. 

For the vast majority of Americans, no action will be required to receive a rebate check. The IRS will use a taxpayer’s most recent tax return.

3. Temporary Relief from Retirement Account Withdrawal Penalties

Aimed to help individuals who experience financial hardships and disruptions due to COVID-19, this provision of the CARES Act relaxes the rules for taking money from your 401(k) or IRA (Individual Retirement Account). Investors of any age can take out a "Coronavirus-related distribution" of as much as $100,000 (or up to 100% of the balance) without paying early withdrawal penalties through the end of 2020. The act also increases the maximum "loan" from your 401k to this amount (previously that was limited to $50,000 or 50% of an employee's balance). 

For your own retirement security, it’s important to take caution before depleting your retirement account. Further, the waiver of the 10% early withdrawal penalty does not waive the fact that the distribution will be taxed as ordinary income. This provision is designed to be a relief for people who truly have no other alternatives.

Unlike the stimulus checks, which will be orchestrated by the government, your company's 401(k) plan sponsor will determine whether Coronavirus-related distributions will be permitted, whether you meet the criteria for this type of distribution and whether the amount you request fits the hardship you are facing. 

4. Temporary Elimination of Required Minimum Distributions (RMD)

By waiving the required minimum distributions from retirement accounts for individuals who are 72 and older, the CARES Act would provide the opportunity for individuals who do not need their money now to hopefully recoup some of what they’ve lost when the markets recover.

Under the act, account owners could skip both their 2019 RMD if it was their first year and had not yet made an RMD by April 1, 2020, and their 2020 RMD. For most people, their IRAs and 401(k)s are funded with tax-deferred dollars. Once the SECURE Act passed in 2019, account owners had to start taking out mandatory, taxable distributions from their retirement accounts at age 72.

With many Americans struggling in 2020 because of the pandemic, having more flexibility on distributions can be beneficial. And since the markets have been so volatile, this option allows investors the flexibility to not be forced to sell securities at depressed values.

5. Added Charitable Deduction

To encourage charitable giving that would otherwise likely decline amid the COVID-19 emergency, the CARES Act allows a $300 above-the-line tax deduction. This allows the majority of Americans who no longer itemize their taxes to receive a financial benefit from some of their charitable donations. It remains uncertain whether Congress intended this allowance to apply to future years as well or if this is a one-time incentive as part of the COVID-19 disaster response. 

In addition, to encourage larger gifts by taxpayers with significant charitable intentions, taxpayers may elect to disregard the 60% of adjusted gross income limitation on gifts of cash and appreciated securities and deduct such gifts in full for 2020.

For now, the hope is that this change will benefit those nonprofits that traditionally rely upon a volume of smaller-level contributions, including those charities that provide direct services to the needy, healthcare organizations, such as nonprofit hospitals and religious organizations. 

6. Postponed Tax Filings

Individuals have three additional months to file their taxes, with the April 15, 2020 deadline pushed back to July 15, 2020. For more details around this provision, refer to Part 1 of our series, Tax Relief: 5 Key Takeaways.

It can be challenging to fully understand and decipher these changes when they are enacted. The C&N team is committed to keeping you informed & prepared as more details of the CARES Act and other COVID-19-related legislation are released and better understood.

For up-to-date information about the COVID-19 pandemic and C&N, visit our

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