F.A.Q. on stimulus checks, unemployment and the coronavirus plan

The $2 trillion relief bill will send money directly to Americans, greatly expand unemployment coverage and make a number of other changes.

  • By Tara Siegel Bernard and Ron Lieber,
  • The New York Times News Service
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President Trump has signed a bipartisan $2 trillion economic relief plan to offer assistance to tens of millions of American households affected by the coronavirus pandemic. Its components include stimulus payments to individuals, expanded unemployment coverage, student loan changes, different retirement account rules and more.

Here are the answers to common questions about what’s in the plan. We’ll update this article as we know more about the details.

Stimulus payments

Q: How large will the payments be?

A: Most adults will get $1,200, although some would get less. For every qualifying child age 16 or under, the payment will be an additional $500.

Q: How many payments will there be?

A: Just one. Future bills could order up additional payments, though.

Q: How do I know if I will get the full amount?

A: It depends on your income. Single adults with Social Security numbers who have an adjusted gross income of $75,000 or less will get the full amount. Married couples with no children earning $150,000 or less will receive a total of $2,400. And taxpayers filing as head of household will get the full payment if they earned $112,500 or less.

Above those income figures, the payment decreases until it stops altogether for single people earning $99,000 or married people who have no children and earn $198,000. According to the Senate Finance Committee, a family with two children will no longer be eligible for any payments if its income surpassed $218,000.

You can’t get a payment if someone claims you as a dependent, even if you’re an adult. In any given family and in most instances, everyone must have a valid Social Security number in order to be eligible. There is an exception for members of the military.

You can find your adjusted gross income on Line 8b of the 2019 1040 federal tax return.

Q: Do college students get anything?

A: Not if anyone claims them as a dependent on a tax return. Usually, students under the age of 24 are dependents in the eyes of the taxing authorities if a parent pays for at least half of their expenses.

Q: What year’s income should I be looking at?

A: 2019. If you haven’t prepared a tax return yet, you can use your 2018 return. If you haven’t filed that yet, you can use a 2019 Social Security statement showing your income to see what an employer reported to the I.R.S.

Q: What if my recent income made me ineligible, but I anticipate being eligible because of a loss of income in 2020? Do I get a payment?

A: The plan does not help people in that circumstance now, but you may benefit once you file your 2020 taxes. That’s because the payment is technically an advance on a tax credit that is available for the entire year. So it will depend on how much you earn.

And there are many other provisions in the legislation. You may be able to file for unemployment or for one of the new loans for small business owners or sole proprietors.

Q: Will I have to apply to receive a payment?

A: No. If the Internal Revenue Service already has your bank account information from your 2019 or 2018 returns, it will transfer the money to you via direct deposit based on the recent income-tax figures it already has.

Q: What if my direct deposit information has changed or I want to add it for the first time?

A: On March 30, the I.R.S. said on its website that it would build a portal where people can update their information “in the coming weeks.”

Q: When will the payment arrive?

A: Treasury Secretary Steven Mnuchin has said he expected most people to get their payments by April 17. Presumably those people using the new portal would not get money until a few weeks after they are first able to provide their information. The I.R.S. has not said when those receiving paper checks would get them.

Q: What if I haven’t filed tax returns recently? Will that affect my ability to receive a payment?

A: It could. “People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment,” the I.R.S. announced on its website on March 30. Included among those are many low-income taxpayers, veterans and individuals with disabilities.

The I.R.S. was quick to reassure those people that they would not somehow end up owing tax just because they are filing tax returns now, in order to make it easier to receive this one-time payment. It said it would post information “soon” on its coronavirus information page about how to file a return with “simple, but necessary” information, including direct deposit information.

If you’re worried about money that you already owe that you cannot pay, the I.R.S. recommends consulting a tax professional who can help you request an alternative payment plan or some other resolution. You may also be able to apply online without the help of a pro.

Q: Will most people who are receiving Social Security retirement and disability payments each month also get a stimulus payment?

A: Yes.

Q: Will eligible unemployed people get these stimulus payments? Veterans?

A: Yes and yes.

Q: Will U.S. citizens living abroad get a payment?

A: Yes, as long as they meet the income requirements and have a Social Security number.

Q: If my payment doesn’t come soon, how can I be sure that it wasn’t misdirected?

A: According to the bill, you will get a paper notice in the mail no later than a few weeks after your payment has been disbursed. That notice will contain information about where the payment ended up and in what form it was made. If you couldn’t locate the payment at that point, it would be time to contact the I.R.S. using the information on the notice.

Q: Do I have to pay income taxes on the amount of my payment?

A: No.

Q: If my income tax refunds are currently being garnished because of a student loan default, will this payment be garnished as well?

A: No. In fact, the bill temporarily suspends nearly all efforts to garnish tax refunds to repay debts, including those to the I.R.S. itself. But this waiver may not apply to people who are behind on child support.

Unemployment benefits

Q: Who will be covered by the expanded program?

A: The plan wraps in far more workers than are usually eligible for unemployment benefits, including self-employed people and part-time workers.

The bottom line: Those who are unemployed, are partly unemployed or cannot work for a wide variety of coronavirus-related reasons will be more likely to receive benefits.

Q: How much will I receive?

A: It depends on your state.

Benefits will be expanded in an attempt to replace the average worker’s paycheck, explained Andrew Stettner, a senior fellow at the Century Foundation, a public policy research group. The average worker earns about $1,000 a week, and unemployment benefits often replace roughly 40 to 45 percent of that. The expansion will pay an extra amount to fill the gap.

Under the plan, eligible workers will get an extra $600 per week on top of their state benefit. But some states are more generous than others. According to the Century Foundation, the maximum weekly benefit in Alabama is $275, but it’s $450 in California and $713 in New Jersey.

So let’s say a worker was making $1,100 per week in New York; she’d be eligible for the maximum state unemployment benefit of $504 per week. Under the new expansion, she gets an additional $600 of federal pandemic unemployment compensation, for a total of $1,104, essentially replacing her original paycheck.

States have the option of providing the entire amount in one payment, or sending the extra portion separately. But it must all be done on the same weekly basis.

Q: Do I have to apply for the extra $600 separately?

A: No. Eligibility depends on whether you qualify for state or other federal unemployment benefits.

Q: Will I get the full $600?

A: If you’re eligible for at least $1 of state-level or federal unemployment compensation, you get the full $600, according to the Labor Department.

Q: Are gig workers, freelancers and independent contractors covered?

A: Yes, self-employed people are newly eligible for unemployment benefits.

Benefit amounts will be calculated based on previous income, using a formula from the Disaster Unemployment Assistance program, according to a congressional aide.

Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.

Q: What if I’m a part-time worker who lost my job because of a coronavirus reason, but my state doesn’t cover part-time workers? Am I still eligible?

A: Yes. Part-time workers are eligible for benefits, but the benefit amount and how long benefits will last depend on your state. They are also eligible for the additional $600 weekly benefit.

Q: What if I have Covid-19 or need to care for a family member who has it?

A: If you’ve received a diagnosis, are experiencing symptoms or are seeking a diagnosis — and you’re unemployed, partly unemployed or cannot work as a result — you will be covered. The same goes if you must care for a member of your family or household who has received a diagnosis.

Q: What if my child’s school or day care shut down?

A: If you rely on a school, a day care or another facility to care for a child, elderly parent or another household member so that you can work — and that facility has been shut down because of coronavirus — you are eligible.

Q: What if I’ve been advised by a health care provider to quarantine myself because of exposure to coronavirus? And what about broader orders to stay home?

A: People who must self-quarantine are covered. The legislation also says that individuals who are unable to get to work because of a quarantine imposed as a result of the outbreak are eligible.

Q: I was about to start a new job and now can’t get there because of an outbreak.

A: You’re eligible for benefits. You will also be covered if you were immediately laid off from a new job and did not have a sufficient work history to qualify for benefits under normal circumstances.

Q: I had to quit my job as a direct result of coronavirus. Would I be eligible to apply for benefits?

A: It depends. Let’s say your employer didn’t lay you off but you had to quit because of a quarantine recommended by a health care provider, or because your child’s day care closed and you’re the primary caregiver. Situations like that are covered.

But this provision wasn’t intended to cover people who quit (or want to quit) because they fear that continuing to work puts them at risk of contracting coronavirus, according to congressional aides.

Q: My employer shut down my workplace because of coronavirus. Am I eligible?

A: Yes. If you are unemployed, partly unemployed or unable to work because your employer closed down, you’re covered under the bill.

Q: The breadwinner of my household has died as a result of coronavirus. I relied on that person for income, and I’m not working. Is that covered?

A: Yes.

Q: Whom does the bill leave out?

A: Workers who are able to work from home, and those receiving paid sick leave or paid family leave are not covered. New entrants to the work force who cannot find jobs are also ineligible.

Q: How long will the payments last?

A: Many states already provide 26 weeks of benefits, though some states have trimmed that back while others provide a sliding scale tied to unemployment levels.

The bill provides all eligible workers with an additional 13 weeks. So participants in states with 26 weeks would be eligible for a total of 39 weeks. The total amount cannot exceed 39 weeks, but it may be shorter in certain states.

The extra $600 payment will last for up to four months, covering weeks of unemployment ending July 31.

Q: How long would the broader program last?

A: Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27, 2020, and through Dec. 31, 2020.

Q: I’m already receiving unemployment benefits. Will I receive any help?

A: Yes. Even if you’re already receiving unemployment benefits for reasons unrelated to the coronavirus, your state-level benefits will still be extended by 13 weeks. You will also receive the extra $600 weekly benefit from the federal government.

Q: My unemployment recently ran out — could I sign up again?

A: Yes. If you’ve exhausted your benefits, eligible workers can generally reapply. But how much you get and for how long depends on the state where you worked. Everyone gets at least another 13 weeks, along with the extra $600 payment through July 31.

Q: Are any unemployment benefits retroactive?

A: Maybe. If you are newly eligible for benefits, you may be able to claim state-level benefits retroactively, back to Jan. 27. But it will ultimately be determined by your state, which will consider the date that you became unemployed and any extenuating circumstances that prevented you from filing earlier, according to a representative for the Department of Labor.

People who are already receiving unemployment will not get any retroactive benefits. If your benefits run out, you’ll be eligible for the added 13 weeks of state-level benefits (as long as you continue to meet the eligibility criteria).

The extra $600 payment being paid by the federal government is also not retroactive.

Q: Will this income disqualify me from any other programs?

A: Maybe. The additional $600 benefit counts as income when determining eligibility for means-tested programs, except for Medicaid and the Children’s Health Insurance Program, known as CHIP.

Q: How long will I need to wait for benefits?

A: States have been incentivized to waive the one-week waiting period, but it’s unclear how long it will take to process claims — especially with state offices so strained by a flood of applicants.

The arrival of the extra $600 depends on when your state signed an agreement with the Department of Labor. The week ending April 4 or 5 (depending how your state lays out its calendar) is the first week for which unemployed workers can claim the new federal benefit.

But that doesn’t necessarily mean benefits will flow right away. States that are unable to immediately pay the federal pandemic benefit after they sign agreements will pay them retroactively for the weeks you’re entitled to receive them.

Q: Are benefits taxable?

A: Yes. Benefits are subject to federal income taxes and most state income taxes, according to the Department of Labor. The same goes for the $600. You should be able to elect to have taxes withheld.

Child support obligations can also be deducted from your benefits.

Student loans

Q: The federal government has already waived two months of payments and interest for many federal student loan borrowers. Is there a bigger break now with the new bill?

A: Yes. Until Sept. 30, there will be automatic payment suspensions for any student loan held by the federal government, and it’s retroactive to March 13. It is hard to contact many of the loan servicers right now, so check your account online in the coming weeks. Once you are logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.

Q: How do I know if my loan is eligible?

A: If you’ve borrowed money from the federal government — a so-called direct loan — in the past 10 years, you’re definitely eligible. According to the Institute for College Access & Success, 90 percent of loans (in dollar terms) will be eligible.

Older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible, nor are Perkins loans that your school owns (ask your financial aid office if you’re not sure), loans from state agencies, or loans from private lenders like Discover, Sallie Mae and Wells Fargo. The holders of all those kinds of loans may be offering their own assistance programs.

Within a few weeks, you are supposed to receive notice indicating what has happened with your federal loans. You can choose to keep paying down your principal if you want, and you should contact your loan servicer if that is the case. Then, after Aug. 1, you should get multiple notices letting you know about the cessation of the suspension period and that you may be eligible to enroll in an income-driven repayment plan.

Q: I’m signed up for automatic payments. Will my servicer turn them off by itself during this period?

A: Yes, that is how it’s supposed to happen, according to information that the Education Department posted.

Q: What happens if I’ve already made a payment since March 13?

A: You can ask your loan servicer to refund it to you. But keep in mind that it is taking time for servicers to interpret Education Department guidance so they can change their websites and update their customer service representatives.

Q: Will my loan servicer charge me interest during the six-month period?

A: The bill says that interest “shall not accrue” on the loan during the suspension period.

After repeated questions, the Education Department said any unpaid interest from before the period began will not be added to your loan’s principal — a process known as capitalization — because of the six-month suspension.

In short: No one is supposed to have a larger balance after the suspension than before.

At the end of the suspension, keep a close eye on what your loan servicer does (or does not do) to put you back into your previous repayment mode. Servicer errors are common.

Q: Will the six-month suspension cost me money, since I’m trying to qualify for the public service loan forgiveness program by making 120 monthly payments?

A: No. The legislation says that your payment count will still go up by one payment each month during the six-month suspension, even though you will not actually be making any payments. This is true for all forgiveness or loan-rehabilitation programs.

Q: Is wage garnishment that resulted from being behind on my loan payments suspended during this six-month period?

A: Yes. So is the seizure of tax refunds, the reduction of any other federal benefit payments and other involuntary collection efforts.

Q: Are there changes to the rules if my employer repays some of my student loans?

A: Yes. Some employers do this as an employee benefit. Between the date the bill is signed and the end of 2020, they can offer up to $5,250 of assistance without that money counting as part of the employee’s income. If the employer pays tuition for classes an employee is taking, that money will also count toward the $5,250.

Retirement accounts

Q: Which retirement account rules are suspended?

A: For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover.

This change would not affect old-fashioned pensions.

Q: What if I have to take money out of my I.R.A. or workplace retirement plan early?

A: You can withdraw up to $100,000 this year without the usual 10 percent penalty, as long as it’s because of the outbreak.

You will also be able to spread out any income taxes that you owe over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.

This exception applies only to coronavirus-related withdrawals. You qualify if you tested positive, a spouse or dependent did or you experienced a variety of other negative economic consequences related to the pandemic. Employers can allow workers to self-certify that they are qualified to pull money from a workplace retirement account.

Q: Can I still borrow from my 401(k) or other workplace retirement plan?

A: Yes, and you can take out twice the usual amount. For 180 days after the bill passes, with certification that you’ve been affected by the pandemic, you’ll be able to take out a loan of up to $100,000. Usually you can’t take out more than half your balance, but that rule is suspended.

If you already have a loan and were supposed to finish repaying it before Dec. 31, you get an extra year.

Charitable contributions

Q: I want to help people who are suffering from the pandemic. Does the bill do anything about charitable donations?

A: Yes. The bill makes a new deduction available — and not just for 2020 — for up to $300 in annual charitable contributions. It’s available only to people who don’t itemize their deductions, and you calculate this new one by subtracting the amount you give from your gross income.

To qualify, you have to give cash to a qualified charity and not to a donor-advised fund, which is a charitable account that affluent people often use to bunch contributions in a particular year in order to maximize deductions. If you’ve already given money since Jan. 1, that contribution counts toward the $300 cap.

Q: I am lucky to have substantial wealth, and I want to give more to charity than I usually do. Have the limits on charitable deductions changed?

A: Yes, they have. As part of the bill, donors can deduct 100 percent of their gift against their 2020 adjusted gross income. If you have $1 million of income, you can give $1 million to a public charity and deduct the full amount in 2020.

The new deduction is only for cash gifts that go to a public charity. If you give cash to, say, your private foundation, the old deduction rules apply. And while the organizations that manage donor-advised funds are public charities, you do not get the higher deduction for donating cash to your donor-advised fund.

If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.

Other features of the bill

Q: How does the aid for small businesses and nonprofits work?

A: Good news here, as you may be eligible for forgivable loans. Our colleague Emily Flitter covered the details in a separate article. Aides to Senator Marco Rubio, Republican of Florida, also wrote a one-page summary of those provisions.

Q: Will there be damage to my credit report if I take advantage of any virus-related payment relief, including the student loan suspension?

A: No. There is not supposed to be, at least.

The bill states that during the period beginning on Jan. 31 and continuing 120 days after the end of the national emergency declaration, lenders and others should mark your credit file as current, even if you take advantage of payment modifications.

If you had black marks in your file before the virus hit, those will remain unless you fix the issues during the emergency period.

Credit reporting agencies can make errors. Be sure to check your credit report a few times each year, especially if you accept any help from any financial institution or biller this year.

Q: What if I find black marks anyway?

A: File a dispute with the credit bureau, but it may take a while to fix them. The Consumer Financial Protection Bureau has told credit bureaus and others that during the pandemic they can take longer than the usual 30 to 45 days to meet the dispute-response deadline, as long as they are making “good faith” efforts.

Q: Is there any relief for renters in the bill?

A: Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. About 70 percent of all mortgages fall into this category. If you want to figure out whether your landlord has such a mortgage, try plugging the address in to the National Housing Preservation Database.

In addition, the bill stipulates that landlords cannot charge any fees or penalties for nonpayment of rent. The eviction suspension applies only to nonpayment; damaging your place is still grounds for action. This moratorium will last for 120 days after the bill passes.

Q: Does this bill change any rules for health savings accounts and health care flexible spending accounts?

A: Yes. After at least 15 years of lobbying and debate, menstrual products are now eligible for reimbursement.

Q: Did the legislation make it illegal for any internet provider to cut off service to an individual or small business that can’t pay its bills?

A: No.

Q: Did the legislation make it illegal for utility providers to cut off service?

A: No.

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