Q: I just lost my job, largely because of COVID-19. My employer (about 75 employees) had to reduce staff because we had to close for a month or so. We are not sure when we will be back in business. I am hearing a lot about unemployment and IRS checks. I make about $55,000 per year (at least in 2019 I did). I am reading a lot of conflicting information. What can I expect?
A: Good news. Help is on the way. A federal law, the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was just enacted on Friday, March 27, 2020. Although the law is hundreds of pages long, let me share the highlights which could impact many Americans.
- Unemployment Compensation
File now if you haven’t. Unemployment benefits have been expanded, and independent contractors and “gig workers” are now eligible. Weekly benefits have increased by $600 and the total number of weeks is now 39 weeks. The separation of employment date must be between January 27, 2020 – December 31, 2020. Also, the seven-day waiting period has been waived.
- Direct Payments to Taxpayers
Taxpayers will receive a one-time payment of $1,200 ($2,400 for couples filing jointly) if their income is $75,000 or less annually. A reduced payment will be paid to those single earners who made $99,000 or less, while the cut-off for couples is $198,000. Families would also receive $500 per child. Direct deposits could occur in April, but paper checks may take more time. About 90% of Americans will receive a direct payment.
- State (Massachusetts) and Federal Income Tax Due Dates
Governor Baker announced that the due date for Massachusetts state income taxes will be extended to July 15th, from April 15th to match the federal tax due date extension.
Hopefully one or more of these options will ease the financial hit for you. Additionally, as part of the CARES Act, there are some programs which incentivize your employer to retain staff. One part of the CARES Act is called the Paycheck Protection Program (PPP). This program is available only to small employers (under 500 employees) but it provides a “forgivable” loan for up to eight weeks of payroll, benefits, utilities and rent. Hopefully your employer is researching this option.