As much has changed since our last newsletter out, we are deviating from our typical format to bring some tips in how to respond financially to our current state of affairs with regard to covid-19. We all need to take this one day at a time and handle the ebbs and flows as they come.

• How is the rebate (aka stimulus money) going to get processed?: The rebate from the CARES Act will be is estimated on 2018/2019 tax filing but the final tally will be decided when taxes are filed in 2020. So if a taxpayer has a child in 2020, there is no immediate benefit from the stimulus but the taxpayer will eventually receive a rebate for the child when they file their taxes in 2021, presuming all other conditions are met. If the taxpayer’s 2020 income would be too high to qualify for the stimulus otherwise, no clawback is noted in the bill. The taxpayer is able to keep the money even though their 2020 income would have disqualified them. 
• How should I use the rebate?:
  • If you have no savings, save it.
  • If you have some savings but have good reason to think you may lose work soon, save it.
  • If you have plenty of savings and reasonable job security, plan to spend the money or invest it back in the market.
  • If you spend it, try to patronize businesses that have been hard-hit has they will appreciate any business they can get right now.
  • Otherwise, take this as an opportunity to buy some stuff you’ve been putting off for a while, like home projects, new appliances, a car, etc., or give the money to institutions, charities, or churches that have been affected.
• What’s happening with student loans?: Student loan interest and payments are waived until September 30, 2020. No action is needed on the part of the borrower to get this benefit. This will happen automatically by all of the loan servicers for Federal loans. The $0 payments will count towards PSLF. This is all fluid, however, so keep up to date with the most recent developments. What may have been correct a week ago (or even yesterday) may have changed.
• Additional benefits from the stimulus bill:
  • Pre-mature distribution penalty of 10% is waived if pulling money out of retirement accounts in response to the impact of the Coronavirus. The money taken out can be contributed back to the account over the next three years, something not usually allowed.
  • Unemployment benefits have been expanded. You can file immediately with eligibility starting the very first week you are unemployed. The benefit can be as high as $600 per week for the first four months.
  • Michael Kitces put together a very helpful article that dives into specific examples for understanding the implementation and implications of the CARES Act. You can read more here.
• Continue to do your part to minimize the spread of covid-19: Live life as you’re able to, as much as it was before this all happened. Support those on the “front lines” and thank them for what they’re doing. Many are putting themselves in harm’s way and are going unrecognized. Our life is a whirlwind like many others and we’re taking it one day at a time. “It is what it is” has become a mantra of sorts as we navigate these waters alongside you.

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