What’s in the CARES Act for Individual Americans?

I bet you’ve heard about the stimulus package by now. It’s titled the “Coronavirus Aid, Relief, and Economic Security Act,” or the CARES Act, and it’s enormous – it’s a $2 trillion stimulus package.

The CARES Act offers relief for several sectors including taxpayers, businesses, health care providers, and the aviation industry. Most of the financial assistance measures for individuals are in the Relief for Workers Affected by Coronavirus Act section of the CARES Act.

The part that applies most directly to individuals is smaller, about $560 billion, according to NPR. Big corporations get $500 billion, small business gets another $377 billion, etc.

CARES Act Breakdown of Assistance

The piece that most affects you is that individual part, which we separate into three major sections:

  • Stimulus checks,
  • Enhanced unemployment benefits,
  • and relaxed 401(k) withdrawal rules.

There are additional benefits, which we also discuss, but I feel those are the big three. (for information on what companies are doing, check out our Coronavirus financial relief page)

Let’s see what has changed:

$1,200 Stimulus Check

The key feature of the CARES Act for most people is a one-time recovery rebate worth up to $1,200 per adult and $500 per child. Similar rebates were issued during the 2008 Great Recession and after the 2001 9/11 terrorist attacks.

The IRS will begin issuing the rebate as a “stimulus payment check” within the next three weeks, according to Treasury Secretary Mnuchin. The IRS will use your 2019 federal tax return data to calculate the amount of the check. If you haven’t filed yet, it’ll use your 2018 tax return information. If you didn’t file either, it can also use your Form SSA-1099 Social Security Benefit Statement or RRB-1099 Social Security Equivalent Benefit Statement.

Most taxpayers will receive their rebate via direct deposit in the same bank account as your last tax refund. If your bank details are not on file, you will receive a paper check. Within 15 days of the payments going out, the IRS will also mail a letter explaining how they paid the rebate. If you need to update information, the letter will outline how to do that.

Like the 2001 and 2008 recovery rebates, there are no spending restrictions. You might use your funds to pay essential bills, save for a rainy day, or pay off debt.

Income Requirements

Your rebate amount is based on your adjusted gross income, tax filing status, and the number of dependents on your federal tax return.

How the 2020 recovery rebate works:

  • Single taxpayers can get $1,200 and joint returns get up to $2,400
  • Each taxpayer gets $500 per child with no limit to the number of children
  • Income phaseouts start at $75,000 for individual returns and $150,000 for joint returns
  • No minimum income requirement
  • Must have a Social Security number
  • Must file a federal tax return for tax year 2019 (or 2018), or get Form SSA-10999 or RRB-1099

There isn’t a minimum required income but income phaseouts will affect high-income households.

The rebate amount decreases $5 for every $100 in additional income for each filing status.

Single taxpayers receive the full rebate amount with an adjusted gross income below $75,000 and a partial rebate with incomes up to $99,000.

The head of household filing status receives the full rebate with an income up to $112,500. A partial rebate ends at $146,500 if you have one child.

Joint returns for married couples begin seeing income phaseouts at $150,000 and ending at $198,000.

Is the Recovery Rebate Taxable?

The recovery rebate isn’t considered taxable income.

The recovery rebate is an advance on a tax credit created for 2020. They determine the amount they send using old information but they will fix it once they know your actual 2020 income. This means that when you file your 2020 return, the IRS will re-calculate the rebate you should’ve gotten and give you more if necessary.

For example, if you added a qualifying child into your family in 2020, then you would get an additional $500 (subject to income phaseouts).

If you make too much in 2020 and the IRS determines they paid you too much today, there is a possibility they will ask for it back but this is considered unlikely.

Unemployment Insurance

There are several enhancements to the normal unemployment benefits. Traditional employees and the self-employed can both qualify for enhanced benefits. (and yes, you can get unemployment benefits and a stimulus check)

Waived One-Week Waiting Period

You must normally wait at least one week after being laid off to file for unemployment insurance. That waiting period is temporarily waived and you can file immediately.

Enhanced Benefits

There are two different temporary unemployment insurance benefit boosts:

  • Receive benefits for an additional 13 weeks — up to 39 weeks
  • A additional $600 per week on top of the standard state benefit.

These are available from April 5, 2020, until July 31, 2020. Your state should automatically apply the benefits if you currently receive unemployment insurance.

Each state manages its own unemployment insurance benefit programs. You typically receive benefits for up to 26 weeks. The average national unemployment insurance weekly benefit is $385 but is less in states with a low cost-of-living.

You can receive close to $1000 a week under this program thanks to the additional $600 weekly federal benefit.

This additional $600 weekly benefit doesn’t impact your status for income status Medicaid or CHIP benefits.

Self-Employed Unemployment Benefits

Small businesses and freelancers who lost their job due to the novel coronavirus can collect unemployment benefits in 2020 as well.

The Pandemic Unemployment Assistance (PUA) offers benefits to the self-employed, independent contractors, and gig workers that usually don’t qualify for unemployment insurance.

Workers who do not have enough hours to qualify for their state’s standard unemployment insurance may also qualify for PUA benefits.

This assistance program offers a weekly $600 benefit for up to 39 weeks. You may receive benefits through December 31, 2020, which is longer than the current unemployment insurance benefits.

Short-Time Compensation

Your employer may keep you on the payroll but pay you a part-time wage. You can receive partial unemployment benefits during this time. The Relief for Workers Affected by Coronavirus Act will reimburse businesses who participate in this program.

Retirement Account Withdrawals

Normally, when you withdraw funds from an IRA or 401(k), you had to pay additional penalties if it wasn’t a loan. There were changes to these rules as long as you satisfy certain conditions.

No 10% Early Withdrawal Penalty

Most IRA and 401(k) withdrawals before age 59 ½ are subject to a 10% early withdrawal penalty. Some qualifying exceptions can be paying for college or being a first-time homebuyer.

Up to $100,000 in unreimbursed novel coronavirus-related expenses can be withdrawn penalty-free from qualifying retirement accounts. This fee waiver applies for qualifying withdrawals made on or after January 1, 2020.

If you’re pulling from a traditional IRA or 401(k), you must still pay income tax on the withdrawal amount. You can pay the tax over three years. It’s possible to avoid the tax by paying back the withdrawal amount within three years. Your (re)contributions don’t affect the annual contribution limits.

Individuals qualify for this fee waiver if they meet one of these conditions:

  • The plan holder is diagnosed with COVID-19
  • A spouse or dependent is diagnosed with COVID-19
  • Adverse financial consequences such as job loss, quarantine, unable to work due to child care, and other events defined by the U.S. Treasury Secretary

Temporary Waiver of Required Minimum Distributions

Tax-deferred retirement accounts like a traditional IRA or traditional 401(k) have required minimum distributions (RMDs) starting at age 70 ½. Or, age 72 if you turn 70 ½ in 2020 or later. Your first RMD for 2020 needed to happen by April 1, 2020.

You do not need to make any RMDs during calendar year 2020.

Student Loan Payments

If you have federal student loans, you received a bit of relief in this arena as well.

Suspends Loan and Interest Payments

Interest payments on most federal student loans is waived starting March 13, 2020, until September 30, 2020. This interest waiver was announced before the CARES Act was introduced. Monthly payments are also in forbearance until September 30, 2020.

The interest and payment waivers apply automatically to qualifying loans. Any payment you make through September 30 goes directly to the loan balance. Interest-free payments can be an incentive for during this time.

These payment-free months also apply toward 120 qualifying payments for the Public Service Loan Forgiveness (PSLF) program. You will still need to maintain eligible employment during this time.

Private student loans, school-held Perkins loans, and FFEL loans held by private institutions do not qualify for these federal benefits.

Tax-Free Employer Student Loan Payment

Some employers make monthly student loan payments for their employees. This employer perk is taxable for individuals under ordinary circumstances. Up to $5,250 in employer contributions tax contributions are tax-free from the bill passage date (March 27, 2020) until January 1, 2021.

Health Insurance Benefits

The CARES Act clarifies some of the coronavirus-related expenses for public and private health insurance plans. Most of the health stimulus benefits go directly to medical provides as a “Marshall Plan” for health care systems.

Telehealth Services

You can use Health Savings Account (HSA) funds to pay for telehealth services before reaching your annual health plan deductible.

Your health plan may also waive the co-pay fee for telehealth services.

Free Coronavirus Testing

A previous stimulus round offered free novel coronavirus and COVID-19 diagnostic testing for the uninsured and government-sponsored health plans. The CARES Act waives the co-pay fee on diagnostic testing for private health insurance plans.

Some private plans are also waiving the co-pays for related treatment at in-network providers.

Federal Income Tax Benefits

Some of the other stimulus package benefits can benefit you when filing your taxes.

Charitable Contributions

Previously, you had to itemize your deductions if you wanted to deduct charitable contributions. For this year, all taxpayers can claim a $300 tax deduction (above the line) for charitable donations. If you have more than $300 and wish to claim them, you will need to file an itemized return.

Extended Tax Filing Deadlines

If you still need to file your 2019 federal income tax return, you have extra time. The new filing deadline is July 15, 2020, even if you owe a tax liability. Your state may also extend their tax filing deadline to reflect the federal filing extension but you have to double-check that. For example, my state of Maryland extended the deadline for individual tax returns to July 15th but business-related tax returns are due June 1st.

Estimated taxes for the first quarter of 2020 are now due on July 15, 2020, instead of April 15.

These measures can bring a little bit of relief, certainly more so than what was in place pre-pandemic, so please make sure you use the benefits as best you can.

Also, there’s already talk about additional assistance packages in the near future so keep on the lookout for those.

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About Jim Wang

Jim Wang is a thirty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

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  1. Amanda says

    Does this apply to kids under 18 who get survivors benefits?? The payee of the kids recieved the 1200$ but when he filed he put the kids info in with his and he got his 1200$ but didnt get the money for the kids ?? Is this because the kids will get their money through the social security office or they don’t qualify because they receive survivors benefits?? Thanks

    • Jim Wang says

      I’m afraid I don’t know about that specific situation, you might want to contact a financial professional to take a look at that scenario.

  2. Sandra says

    Can you tell me where I can find the contact information for the stimulus package? I want to voice my concern to whomever is in charge to change the requirements for the stimulus package?
    Is it the House Ways and Means Committee that is in charge of this?
    Leaving 17-24 year old’s out and garnishing stimulus for child support is just plain dumb! This package is supposed to help the American People not disappoint and dishearten them. Thank you.

  3. Emelyn says

    Hi jim…. my husband have owe in child support are the IRS will garnish the stimulus check… we are married filling….

  4. Ben Shaw says

    Hi Jim, residents of Orange County, FL can apply for $1,000 stimulus check. How to find out which other counties in US offer such help? Thank you

    • Jim Wang says

      You have to search the county website of the county you live in – look specifically for how they intend to spend the money disbursed from the CARES Act.

  5. Kelly says

    Hello Jim,

    Hope all is well. I am currently living off my 401, until I get approved for SSD. Could I apply for the PUA unemployment?

    • Jim Wang says

      If you lost your job or lost hours at your job, I would apply for unemployment (or at least talk to someone there to find out more). I’m not an unemployment benefits expert so I don’t know.

  6. Andrea Estrada says

    My unemployment benefits exhausted right after covid 19 hit, and I still have not received any additional benefits from unemployment. Shouldn’t I be able to get the 600 a week? I have 3 children I have to support. I keep calling twc to request payment for unemployment.

  7. Alex says

    So if they decide to give another check will the people who didn’t receive a check the first time due to back child support will we be able to get the second one because child support wanted there money so bad I ended up homeless because I couldn’t pay my rent I don’t care what the government said they went
    Ahead and did it anyway

  8. Joshua says

    Hello is there no relief package for people who worked through the whole covid 19 ? My job took away the small hazard pay we get per hour of work . I’m still working but helping others out also.

    • Jim Wang says

      There doesn’t appear to be any plans to subsidize the income of essential workers in the next package.

  9. Angelica says

    I never got my 1st check
    And I had the COVID-19 for a month
    Also my son never got his check either
    Is there a number or address I can get to see what’s up with this

  10. Colleen Alonzo says

    Trying to find out where I apply for family cares act. It seems I am eligible? I babysat my grandson for 9 months because my kids needed childcare so they could work.

    • Jim Wang says

      It’s typically defined by whether or not they are a dependent and it sounds like they weren’t, you were just taking care of them?

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