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The rapid spread of the coronavirus has led many states to mandate stay-at-home orders to protect the lives of hundreds of millions of residents. Although these social distancing measures are intended to safeguard the health of the public, the economy has come to a halt as a result. As of the end of April, over 26 million Americans have lost their jobs.
The CARES Act was enacted by Congress and signed into law on March 27, 2020, as a response to the COVID-19 pandemic’s effect on the economy. Coronavirus-related legislation is being quickly developed on both state and federal levels to help Americans during this unprecedented time, but the speed of the measures passing sometimes makes the new developments unclear.
Here’s a closer look at the CARES Act and how it can help you.
What Is the CARES Act?
CARES stands for the Coronavirus Aid, Relief, and Economic Security. The act is essentially a $2.3 trillion stimulus bill to support the U.S. economy through the coronavirus crisis by providing payments, tax breaks and loans to local governments, Americans, and businesses over the next decade.
The CARES Act is intended to provide help to the people and the local governments responsible for them. The main focus of the act is to preserve jobs and protect those who are unemployed due to the COVID-19 pandemic. It provides help in four parts:
Assistance for American Workers and Families: Payments to help Americans during the challenging economic times.
Assistance for Small Businesses: Funding to help small businesses maintain existing payroll and hire back any laid-off employees.
Assistance for State and Local Governments: Providing $150 billion in funding to state, local and tribal governments to navigate the COVID-19 crisis.
Preserving Jobs for American Industry: Employer and small business tax breaks, loans, and deferrals to help businesses keep their employees.
What Does the CARES Act Do?
The U.S. government has allocated almost $2.3 trillion for this act. The funds are meant to keep Americans employed or at least financially covered until they can work again, as well as encourage local governments and businesses to continue to operate. Some of the most notable spending includes the following:
Issuing one-time stimulus checks of at least $1,200 to qualifying taxpayers.
Expanding and extending unemployment benefits by $268 billion.
Providing $887 billion in loans and grants to local governments and businesses of all sizes.
$276 billion in tax cuts for businesses including payroll tax credits and pushing back payroll tax due now to 2021 or 2022.
Providing at least $1.25 billion in aid to each state impacted by the slowdown in the economy which has created a decrease in tax revenues the states would normally use to fund public services.
Providing $153 billion to healthcare facilities and support teams due to the impact of the coronavirus.
Allocating $42 billion for additional food stamps, housing support, and child and family services funding nationwide.
$40 billion for education-related spending, including the deferral of student loan interest for six months and maintaining student aid for existing students.
$20 billion for individual tax cuts to give the public a break as they struggle financially.
Who Does It Help?
The CARES Act helps nearly everyone. Employees, employers, independent contractors, the unemployed, small and large businesses, and states and local governments all benefit from provisions in the act.
If your small business is struggling, you may be eligible to receive payroll tax breaks and defer your payroll tax until next year. You may also qualify for loans and grants to keep your business afloat and your employees in place to weather the outbreak.
If you’re currently unemployed, your state’s unemployment benefits have been increased and extended. Even freelancers and independent contractors, who would not normally be eligible for unemployment in the past, are now eligible through the CARES Act’s Pandemic Unemployment Assistance program. Contact your state unemployment office for more details, since states have rolled out their independent contractor benefits at different times and with different conditions.
How Much Money Are You Eligible For?
Aside from the assistance mentioned, all households are eligible to receive a one-time stimulus check. The CARES Act provides all households with a payment of up to $1,200 per adult (with an income of less than $99,000 or $198,000 for joint filers) and $500 per child under 17 years old. That adds up to $3,400 for a family of four.
How Can You Apply?
You don’t need to apply to receive your stimulus check. If you file tax returns every year, you don’t have to do anything further. If you haven’t filed in the last couple of years because you don’t make enough to file, you can sign up to receive your economic impact payment through the IRS website. You can also track the progress of the payment, as well as choose to receive the check via paper check or direct deposit through the website.
If you collect Social Security, you also don’t have to do anything but wait. The IRS will use the information provided on Form SSA-1099 and Form RRB-1099 to generate your economic impact payment.
Navigating the Crisis
The current COVID-19 situation isn’t easy. Luckily, state and federal governments are taking measures to support you as the situation evolves. Do your part to help the economy by buying from small businesses to support them during the COVID-19 crisis. The outbreak is likely temporary, but its economic impact will remain for years.
About the Author: Jori Hamilton is an experienced writer from the Pacific Northwest who enjoys discussing social justice, empowerment, and how to improve the workplace. You can follow her on Twitter and LinkedIn.
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