Part of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

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This article covers changes for federally-backed mortgages made as part of the CARES Act.

First and foremost let me say, if you can make your mortgage payment, you should. Congress has not forgiven or erased anyone's debt.  However, for those who have lost their income due to the pandemic, if you have a federally-backed mortgage this law did provide for some temporary relief.

If you were on the verge of foreclosure already, the CARES Act included a 60 day moratorium starting on March 18th.

 If you are not able to make your payment, you should contact your servicer to see what options are available for you.

The CARES Act provided for 180 days of forbearance, which could be extended an additional 180 days.  However, many servicers appear to not be leading with this offer.  Apparently 90 days is more common in reality.  As with all things, what you get will depend upon how familiar you are with your rights, how committed the organization you are negotiating with is to it's goals (and how much flexibility and power the rep on the phone has), and what the two parties can agree upon.

When you contact your servicer, you should state that the need for forbearance is due to the COVID emergency.

The servicer may just pile up the payments due during the forbearance period and ask for them to be paid at the end of the forbearance period.  So for example, if you are allowed to skip your $1,000 mortgage payment in April, May, and June, at the end of that time period you would owe $3,000, plus the $1,000 for July that would be due on the regular schedule.

Needless to say, if someone is out of work and out of cash to the point where they can't pay their mortgage payment, it is unlikely that in 90 days they would magically have several times that amount in free cash.  Even if someone is back working, they'd likely have the regular payment amount, not a large lump sum.  But if you were the bank, wouldn't you ask for that if you could get a client to agree to it?

Be aware that you can request that instead of a lump sum being due at the end of the period that you add payments on the back of the term of the loan. 

If you and the servicer agree to something more limiting than what is allowed under the CARES Act, you should honor your agreement, although you could certainly call back and try to renegotiate.

During the time of the forbearance, the CARES Act requires that servicers report you to credit bureaus as paying as agreed (current) and that they charge no fees and no interest during the forbearance.

If your taxes and insurance payments are escrowed, discuss with your servicer how this should be handled.  Not having to pay your mortgage payment due to forbearance does not exempt you from having to pay your homeowner's insurance premiums or your taxes.

Journal questions:

What does the current crisis expose about the need for emergency funds? 

If you feel there should be more government assistance available now, does this change your thoughts on how our social programs have been constructed to date?  

Part of a series. Covers the additional funding being given to states to supplement unemployment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes additional funding for states to supplement their unemployment programs.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers the additional funds made available to the states to supplement their unemployment programs.  Details are outlined below.

 It is important to remember unemployment programs are run by the Department of Labor of each individual state.  Those departments determine who is eligible for unemployment.

The CARES Act made funding available for the following: 

• Extra federal help – if unemployed or partially employed due to COVID19 (layoffs, furloughs, reduced hours)
• Includes independent contractors, self-employed, and individuals with limited work history
• Covered if you had to quit job to care for someone with coronavirus, child due to school closings, or quarantine order
• State funded benefits ($400/wk national average), plus federal supplement ($600)
• Payments can be made separately, but have to be in the same week
• May need to complete an additional form to get the supplement
• Up to 26 weeks normally, +13 weeks federally funded
• Typically takes 2-3 weeks to apply, then 1 week waiting period. CARES Act requests the waiting period be waived.

Here are some frequently asked questions:

Can I apply for the SBA loans and for unemployment?

If you are applying for a small business loan, you are not considered to be unemployed.

Can I apply for unemployment because my side hustle ended?

If you have a full time job you are not considered to be unemployed.

And a frequent complaint:

“I tried to apply for unemployment and the website crashed/I haven't heard back/etc.”

Yes. 

I think it is fair to assume that IT teams in their testing never anticipated this sort of a spike in demand, so rather than being a conspiracy, it may just well be that systems are slammed. 

When staffing departments, a spike in demand like this was also likely not anticipated.  The folks working these organizations are overloaded, and just like all of us, are trying to balance working, childcare, and their own concerns and anxieties.

Depending upon your politics, you can either see this as the inevitable result of relentless budget cuts meeting unforeseen circumstances, proof of government incompetence, or both. 

My suggestion would be to continue trying to apply.  At the same time, check out your local news and local government websites to see if alternatives are available.  I know some jurisdictions are gathering information on paper forms as an emergency backup.

Journal questions:

What would you do if you were laid off?  How can you best prepare in case you are impacted in the future? 

Part 4 of a series, covering the Paycheck Protection Plan for small businesses.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for Americans, both as individuals and for small business owners. This article covers the Paycheck Protection Plan.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers one of those goodies:  the Paycheck Protection Plan (PPP).  To participate, a business must either be running payroll or doing distributions to owners.  If you are in start up mode and have not yet taken money out of your business, you will not be able to participate.

The PPP allows businesses to borrow two and a half times their wages, rent, and utilities.  Average monthly wages are determined by totaling the amount paid between 4/1/19 and 3/31/20 and dividing by 12. 

Provided the funds are used on approved expenses and at least 75% of those funds are used for payroll, the loans can be forgiven.

The funds must be spent by June 30th. There is no requirement that you show you have been impacted by COVID-19. 

To apply, contact your local bank or credit union.  Many banks are requiring that you have an existing relationship with them in order to apply, so the bank where you have your business checking account would be a good place to start.

These loans are available to self-employed people and independent contractors.

For more details, check out this press release on SBA's site. Here is another article with relevant information from the SBA.

Journal questions:

Is this a great time or a terrible time to be a small business owner? Why? 

Part 3 of a series. Covers the $10,000 from the EIDL that does not have to be repaid.

The Coronavirus Preparedness and Response Supplemental Appropriations Act included SBA loans for small businesses.  The first $10,000 of the loan does not have to be repaid.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On March 6th, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act became law.  This law included funding for telehealth for Medicare, for vaccine development, for public health funding, and for medical supplies and preparedness.  Additionally, extra funding is allocated for departments and agencies.  This law included disaster loans to be provided to small businesses through the SBA.  Those Economic Injury Disaster Loans (EIDL) are discussed in this post.

As a general rule, I believe government programs and loans are best avoided.  However, I also believe we are not going to quickly return to normal in the next few days or weeks, and it is hard to know now what in the future we will wish we had done now.  With that in mind, I decided to apply for the EIDL loan.

My understanding is that if you are in a state that has declared a disaster, you can apply for the EIDL loan from the US Small Business Administration (SBA).  Disaster declarations can be found here.

You will need to disclose your gross receipts for the period from February 1, 2019 to January 31, 2020 plus your cost of goods sold (if applicable).  The application only takes a few minutes to complete.  The loan would be for up to 50% of your gross receipts.

The most interesting part of this program, though, is the $10,000 advance.  This initial money supposedly will be sent directly to your business's account (you will need to provide the routing and transit numbers), and it does not have to be repaid. For more details on the advance, check out the information on the SBA site here.  It is my understanding that accepting the advance does not require you to take out a loan.

I have applied for this program for our IT consulting company.  If you would like to apply, the application is here. 

After I applied, the confirmation screen said I should hear from them via email in about a week to let me know they are processing my application.  I imagine they are completely overwhelmed, but we will see how it goes.  I'll keep you all posted.

In addition to this program, there is also another SBA program, the Paycheck Protection Program, that is intended to help employers keep employees on the payroll.  A portion of that loan can be forgiven.  As I am able to assemble information, I will post more on that as well.

Journal questions:

If you are a small business owner, how has your company been affected?  How do you think this situation will continue to unfold?  What steps could you take now to position yourself for the future? 

Part 2 of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.

The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.

Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department.  There had been 3.2 million first time unemployment claims.  The single largest week record before then was for 700,00 back in 1982.  Check out this article from Business Insider for details.

On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.

This article covers two of those goodies:  the change to the Federal tax deadline and the payments to individuals.  Details are outlined below.

1) Extension to both file and pay 2020 Federal taxes from 4/15 to 7/15.  Note:  while most states have followed suit, not all have (Mississippi is Mississippi-ing again. Check with your state and this article for more details.).

2)Direct payments to individuals.  This is why you came here, right?

It is my understanding that if you in the past got your refund via direct deposit, this money will come in via that same process.  You do not need to take any action.

Please be very cautious as scammers are sadly taking advantage of the opportunity.  If you receive a phone call asking for a bank account or card number in order to get you this money or expedite this process, please do not give out any personal information related to your bank account or social security number.  Older folks are especially at risk from these types of scams, so please reach out to them to help them avoid becoming a victim.

If you have always been a paper check person and can wait for the paper check, I recommend you do so to avoid scams.  However, if you have an emergency situation and cannot wait, the IRS is planning to set up a site to let you give them your bank account details.  Be very sure you are on the IRS's site when you do this.  More information is available at the IRS website.

Most individuals will receive a one time payment of $1,200 each. Kids are worth $500 each, which should cover roughly two to three of the panic grocery shopping trips you did when this whole thing kicked off.

Upper income earners will see the payments begin to phase out for incomes between $75,000 and $99,000.  If you are married filing jointly, the phase out begins at $150,000. The number used to determine this payment will be what you show as your annual income for the most recent tax filing (so 2018 if you have not yet filed for 2019.  2019 if you already got this latest tax return in or can do so before they get to you.)

Journal questions:

What would be the highest and best use of this direct payment? 

On a low information diet to preserve your sanity? Here's the scoop.

There are three new laws that have been put in place to address the Coronavirus outbreak in the US: The Coronavirus Preparedness and Response Supplemental Appropriations Act, The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Response (CARES) Act.

 Please note:  before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman.  My goal is to share my best understanding and to be of service.  I hope you find this helpful.

With memories of the 2008 Financial Crisis still fresh in the minds of anyone old enough to be in Congress, the US has taken bold action to try to reduce the impact of the current situation.  Well, they took bold action on the third try, but this article summarizes all three laws.

On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.

 On March 6th, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act became law.  This law included funding for telehealth for Medicare, for vaccine development, for public health funding, and for medical supplies and preparedness.  Additionally, extra funding is allocated for departments and agencies.  This law included disaster loans to be provided to small businesses through the SBA.  More information on the Economic Injury Disaster Loans will be provided in a subsequent post.

 On March 18th, the FFCRA was passed.  Its main features are to provide employees of certain employers with paid sick leave or extended family or medical leave in response to the viral outbreak.  If an employer has fewer than 500 employees, the organization can receive tax credits to offset the cost of paid leave. There is an exemption for employers with fewer than 50 employees where giving paid leave to employees to take care of children would risk the continuation of the business.  For more details, I recommend consulting the Department of Labor website and your employer.

 On March 27th, the CARES Act was signed.  This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds.  Most of the “goodies” we are interested in are in this act.  My next posts will cover that act.

 Journal questions:

 When in this process do you think our leaders realized the severity of the issue?   When did it start to affect you?