A Guide to COVID-19 and Your Finances: What You Need to Know

[Editor’s Note: This page is no longer being updated and reflects the status of all federal and local coronavirus-related financial relief as of late November. For current information and financial assistance, check the website of the appropriate authority or institution.]

Second only to health concerns amid the coronavirus emergency are Americans’ worries over their individual finances — including job security, health care costs and retirement savings — and fear for the national economy.

The $2 trillion CARES Act enacted policies to mitigate the crisis to a degree, but most of the programs established by the act have expired, and the need for financial relief continues.

The Impact of COVID-19 on the Global Economy

The immediate impact of COVID-19 was swift and crippling to the economy as leaders faced a universal dilemma: protecting public health while simultaneously protecting businesses and American livelihoods.

Across the country, states issued mandatory shelter-in-place orders and closures of non-essential businesses despite the fear of devastating their economies.

That was eight months ago, when California was the first state to issue stay-at-home orders and shutter non-essential businesses on March 19.

At that time, Bill Gates penned an opinion piece for The Washington Post asserting that failure to contain the virus would only prolong the economic fallout.

“Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths,” Gates wrote.

At that time, there were 98,000 weekly reported COVID-19 cases in the United States. Today, we are well beyond 10 weeks of tracking COVID-19 cases, and the numbers continue to surge.

On November 19, 2020, the CDC updated its COVID Data Tracker, which showed that in the United States there were 1,037,962 new weekly cases reported — more than twice what it forecasted in October. Some states have reinstated restrictions on indoor dining and gyms, and New York Governor Andrew Cuomo said during a press conference on November 18, “What happens at 3 percent [infection rate]? Houses of worship, mass gatherings, business restrictions, dining restrictions, schools close.”

All of these restrictions affect the U.S. and state economies.

Did the Coronavirus (SARS-CoV-2) Cause an Economic Depression in the United States?

The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

On April 2, 2020, Gallup released a report based on survey responses from March 27–29, 2020, concluding that 37 percent of Americans believed the United States was in a recession at that time. An additional 21 percent believed the country was in a depression.

In an episode of “The Daily” recorded on November 19, 2020, Ben Casselman, economics writer for the New York Times, referred to current economic conditions as a “service-industry recession.” Casselman’s data emphasized the disparity between the pandemic’s impact on wealthier, white-collar professionals and its effects on lower-wage workers, many of whom work in the service sector.

Although the GDP fell by an annualized rate of 31 percent in the second quarter of 2020 and signaled a recession, the decline didn’t last long. Consumer spending on goods — as opposed to services — has grown by 7.2 percent and housing prices are up by 5.7 percent.

Despite the fact that the general public may interpret the 7.9 percent unemployment rate, 10 million jobs lost, expiration of federal unemployment benefits and miles-long foodbank lines as a clear sign of an economic recession, the country is actually in a recovery phase — at least as far as economists are concerned. As long as economic activity is moving in an upward direction, the country is not in a recession.

Impact on the Financial Sector vs. ‘Real’ Economy

Real economy is measured by unemployment rates, real personal income, gross domestic product (GDP) and the effects of imports and exports.

Economists dialed back their forecasts for GDP in the early months of the pandemic. The Organisation for Economic Co-operation and Development predicted that most of the world’s economies would grow less in 2020 than they did in 2019, citing the government’s ability to contain the pandemic as the key to the GDP snapping back.

S&P Global Ratings referred to “unprecedented rates of decline in economic activity and financial-asset prices, and equally fast and unprecedented policy responses to both combat and offset these declines,” and projected a GDP contraction of 1.3 percent from 2019 in the United States. And in June, the forecast for the real GDP in 2020 was a 5 percent contraction.

In the third quarter of 2020, however, S&P revised its forecast again, projecting that “for full-year 2020, real GDP is likely to contract by 4 percent (was a 5 percent drop in our June forecast) and then grow a modest 3.9 percent in 2021 (was 5.2 percent in June).”

S&P’s analysis points to three primary risks:

• No coronavirus vaccine available with flu season approaching
• Lack of new fiscal stimulus package
• Rising trade tensions with China

Stock Market Volatility from February to November 2020

On April 1, 2020, the S&P 500 recorded its worst first day of any quarter since it launched in 1957. Some of the hardest hit sectors included service industries, including travel and entertainment.

And crude oil prices, which were already on shaky ground as a result of a price war between Saudi Arabia and Russia, had also seen significant declines.

Heightened anxiety among investors led to unprecedented market volatility and federal intervention.

Seven months later, the U.S. Bureau of Economic Analysis released an advance estimate of a 33 percent annualized increase in GDP for the third quarter of 2020. The estimate was published on Oct. 30, 2020, based on incomplete data, and the BEA will release a second estimate on Nov. 25.

On Nov. 23, 2020, S&P Global’s Daily Update reported that in spite of elevated market volatility, “equities have fared reasonably (some would say surprisingly) well, with the S&P 500® climbing 13 percent through Nov. 19 since the end of 2019.”

BEACH Stocks Hit Hardest by Pandemic-Related Closures and Declines in Business

Booking, entertainment and live events, airlines, cruises and casinos, and hotels and resorts, referred to as BEACH stocks, saw market capitalizations plummet from Feb. 19 to March 24, 2020.

Some of the most significant declines included:

• Six Flags: down 66 percent, from $3.2 billion to $1.1 billion
• Booking Holdings (Kayak, Priceline, OpenTable): down 37 percent, from $80.8 billion to $51 billion
• The Walt Disney Co.: down 31 percent, from $255.1 billion to $177 billion

This data aligns with the service-industry recession Ben Casselman referred to eight months later on “The Daily.”

What Is the CARES Act of 2020?

President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, 2020, to mitigate the financial ramifications of the COVID-19 pandemic.

The $2 trillion measure was intended to infuse the struggling U.S. economy with:

• Direct cash payments to American citizens
• Reimbursements for hospitals and other health care providers for coronavirus-related expenses, including treating uninsured patients
• Loans and bailouts to small businesses
• Billions in relief for airlines and large corporations

In addition to the direct monetary aid, the legislation provides for enhanced unemployment benefits, tax credits to small businesses that agree to retain or quickly rehire employees, Medicare coverage for senior telehealth services and mortgage forbearance.

How Was the CARES Act Passed?

The bill — a measure New York Times contributor Jim Tankersley said was celebrated as “a late but necessary intervention” — was approved unanimously by the Senate on March 25, 2020.

During negotiations among the Trump administration, Senate Democrats and Republicans, Democrats fought for increased protection for workers and more money for health care providers and state governments, and Republicans expressed concerns over the size of the benefits package and the risk of inflation.

But ultimately the urgency of the pandemic forced a bipartisan compromise that made the CARES Act the largest federal aid deal in U.S. history.

Key Provisions of the Federal Coronavirus Relief Bill

The final iteration of the CARES Act includes provisions for individuals, small businesses and nonprofits, sole proprietors, freelance and contract workers, large corporations and hospitals.

CARES Act provisions included:

• Economic impact payments
• Expanded unemployment benefits
• High-deductible health plan coverage for coronavirus testing and treatment
• Medicare coverage for telehealth care for seniors
• Tax filing deadline extension
• Mortgage forbearance
• Moratorium on evictions and foreclosures
• Bans on evictions from properties with government-backed loans (120 days)
• Employee retention credit for small businesses
• Paycheck Protection Program
• Families First Coronavirus Response Act
• Loans and bailouts for small businesses and large corporations
• Reimbursements to hospitals for coronavirus-related expenses

Where Did the Money Go?

The legislation passed in response to the coronavirus pandemic so far has totaled roughly $3.3 trillion.

The four pieces of legislation have provided emergency funding for immediate health response to the pandemic, vaccine development, as well as funding for the Families First Coronavirus Response Act, the CARES Act and the second wave of funding for the Paycheck Protection Program.

As of Nov. 23, 2020, no new stimulus package has been approved by Congress. Many of the stimulus programs offered by the CARES Act will expire in less than six weeks — at the end of 2020.

Stimulus Program Expiration Dates

Before Dec. 31, 2020:

• Extended unemployment benefits up to 39 weeks — depending on when you began receiving benefits

Dec. 31, 2020:

• Extended unemployment benefits up to 39 weeks — depending on when you began receiving benefits
• Enhanced unemployment benefits for self-employed, independent contractors and gig economy workers
• 401(k) hardship withdrawals
• Eviction moratorium
• Fannie Mae, Freddie Mac, FHA and VA mortgage protection

January 2021

• Federal student loan payment deferral — does not apply to private student loans

Economic Impact Payment

According to the IRS and the Treasury Department, 88.1 million people had received economic impact payments as of April 17, 2020. The stimulus checks so far have totaled nearly $158 billion.

Nov. 1, 2020, was the last day to request an economic impact payment. If you’re still waiting for your stimulus check, you can check the status of your payment through the IRS’s Get My Payment tool.

You may still be eligible for a payment in 2021 if you didn’t register online or by mail and did not receive a payment in 2020 or if you received a payment for less than the full amount for which you qualified.

You may be eligible for the Recovery Rebate Credit when you file a Form 1040 or 1040SR for 2020. The IRS instructions say you must “save your IRS letter – Notice 1444 Your Economic Impact Payment – with your 2020 tax records. You’ll need the amount of the payment in the letter when you file in 2021.”

The stimulus criteria stated that individual tax filers with adjusted gross income up to $75,000 would receive the full $1,200 payment.

Married couples filing jointly who earn up to $150,000 would receive the full $2,400 payment. In addition, for each qualifying child, eligible taxpayers would receive up to $500.

People who file as head of household and earn $112,500 or less would also receive the full payment.

The payment amount was reduced by $5 for each $100 above the maximum income thresholds.

Social Security recipients and railroad retirees who were otherwise not required to file a tax return were also eligible and would not be required to file a return.

Non-filers were required to use the non-filer tool specifically for eligible U.S. citizens or permanent residents who had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019 or who were not required to file a 2019 federal income tax return.

Who Was Not Eligible for an Economic Impact Payment?

• Single filers who earned more than $99,000
• Joint filers with no children who made more than $198,000
• Adults who were claimed as a dependent on someone else’s 2019 tax return

According to a report from the Taxpayer Advocate Service, “Although the IRS has issued nearly 160 million Economic Impact Payments (EIPs), many individuals as of June 3, 2020, for a variety of reasons, have either not received the full EIP amount to which they are entitled or received an EIP at all. In most cases, these individuals will have to wait until 2021 to receive either their EIP or the full amount.”

Taxes

The IRS extended the income tax filing deadline to July 15, 2020.

This was helpful for people who owed taxes, but for those expecting refunds or stimulus checks, had an incentive to file early.

Although most people who were eligible for a stimulus check did not need to take any action, the IRS issued a news release on March 30, 2020, that directed taxpayers who do not typically file returns to submit a simple tax return in order to receive their economic impact payment.

On April 1, 2020, the Treasury Department and the IRS announced that Social Security beneficiaries who were not typically required to file tax returns did not need to file an abbreviated tax return to receive an economic impact payment. Instead, payments were automatically deposited into their bank accounts.

The pandemic further complicated tax filing for people who typically rely on assistance with filing their taxes. Because Taxpayer Assistance Centers were closed, the IRS directed them to www.IRS.gov/freefile to find forms and get help with filing and payment options.

IRS People First Initiative

The People First Initiative was a series of provisions to assist people who were dealing with tax payment and compliance burdens.

The IRS highlighted the key actions on its website. They included:

• Existing installment agreements
• New installment agreements
• Offers in compromise (OIC)
• Non-filers
• Field collection activities
• Automated liens and levies
• Passport certifications to the State Department
• Private debt collection
• Field, office and correspondence audits
• Earned income tax credit and wage verification reviews
• Independent office of appeals
• Statute of limitations
• Practitioner priority service

IRS Commissioner Chuck Rettig said in a news release, “In addition to extending tax deadlines and working on new legislation, the IRS is pursuing unprecedented actions to ease the burden on people facing tax issues. During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate.”

Charity

Filers were allowed a charitable deduction of up to $300 in cash to a qualified organization without having to itemize their tax returns.

Unemployment

Unemployment insurance was expanded under the CARES Act.

The federal plan offered $600 per week on top of current state benefits, which typically replace 40 percent to 45 percent of average earnings. The expansion used the estimated average earnings of $1,000 per week to bridge the gap between the states’ unemployment benefits and employees’ real wages.

Under the act, the expanded benefits included self-employed people, as well as part-time workers, freelancers, contractors and gig workers.

The act added 13 weeks of benefits to the typical 26 weeks allowed by most states’ unemployment insurance. The expansion ran through Dec. 31, 2020.

On April 30, 2020, the Labor Department released weekly unemployment data for the week ending on April 25, showing that more than 3.8 million initial claims were filed.

According to the Wall Street Journal, Alexander Bick, an economist from Arizona State University, had compiled data that showed “the employment rate among 18- to 64-year-olds surveyed declined to 55.8 percent in mid-April, indicating that 34 million jobs were lost since mid-March.”

That number marked the highest unemployment rate in recorded history.

But retail and shipping companies anticipated a surge in business for the holidays, which would offer a bit of reprieve to many furloughed and unemployed workers. As of Sept. 25, 2020, many large corporations are hiring for the holidays. These positions are temporary, but many are remote and hours may vary.

In total from February to November, 10 million jobs have been lost. This accounts for approximately 22 million jobs lost in March and April and a gain of about 12 million since then. Of those 10 million lost jobs, 9 million were in the service sector, and 5.5 million belonged to women.

According to Casselman, Black and Hispanic women and parents who are responsible for caring for children who are out of school are being disproportionately affected by the pandemic.

“Because so many of the people who work in low wage service sector jobs are Black and Hispanic women, immigrant women. And they have lost their jobs at an incredibly disproportionate rate,” he told “The Daily” host, Michael Barbaro.

And with COVID-19 cases rising across the country, 12 million people will lose unemployment benefits at the end of 2020 if the federal government doesn’t take additional action immediately.

Seasonal Employment Opportunities

Macy’s, FedEx, Walmart, Amazon, UPS and Best Buy will fill thousands of seasonal positions nationwide, starting in September. Apply directly on the companies’ websites or through job search engines, such as Indeed and LinkedIn, and include the words “seasonal” and “holiday” in your search.

Walmart will fill 20,000 positions at fulfillment centers, with hourly pay rates up to $23.75 per hour.

Among the temporary positions available are:

• Retail
• Customer service
• Warehouse and fulfillment centers
• Package handling
• Driving

If you’re hoping to land a permanent position with the company that hires you, express your intention to the hiring manager right away and ask what you can do to improve your chances of staying on after the holidays.

States Threaten to Take Away Unemployment Insurance Benefits

In states such as Iowa, employees who refused to return to work for fear of contracting the coronavirus were threatened with being stripped of their unemployment benefits, their refusal being deemed a “voluntary quit.”

According to U.S. News and World Report, some states granted exemptions for high-risk workers who met certain criteria. People who were eligible for continued benefits included those ages 65 years or older and people with diabetes, heart disease, cancer or a weakened immune system.

In addition, people who couldn’t work because they had COVID-19 or were caring for family members with the disease were protected. But there are limitations on federal regulations, and states have their own laws.

The Occupational Safety & Health Administration offers protections for workers who have evidence of unsafe working conditions, but experts cautioned that it would be difficult to make a strong case for coronavirus-related concerns as good cause for refusing to return to work. They urged employees to understand all their rights under the law before taking any action.

To learn about the Occupational Safety and Health Act-approved plan in your state, visit OSHA’s website.

The Department of Labor reported that the 6,648,000 seasonally adjusted initial claims for the week ending March 28, 2020, marked “the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series.”

The week ending April 18, 2020, saw another 4.4 million seasonally adjusted initial claims. Although it was a decrease from the prior week’s 5.2 million, it marked the fifth week of initial claims exceeding 3 million.

In the week ending Nov. 14, 2020, which is the last update recorded for this guide, the Labor Department reported 742,000 seasonally adjusted initial claims for unemployment, which represented an increase of 31,000 from the previous week.

How to File for Unemployment Benefits

The U.S. Department of Labor offers a repository of information on filing for unemployment benefits, including instructions for applying and links to each state’s unemployment insurance office.

Your unemployment insurance benefit claim must be filed with the program in the state in which you were employed. You can file a claim online, in person or via telephone.

Refer to your state’s unemployment insurance program to confirm that you qualify for benefits. States have different criteria for eligibility. In order to ensure that Americans are getting the economic assistance they need as quickly as possible, most states are waiving their one-week waiting periods and other requirements.

For example, Florida normally requires unemployment benefit recipients to be actively seeking employment while collecting payments. But the state waived this requirement along with its work registration requirement until May 2, 2020.

Follow the Labor Department’s guidelines for filing your claim:

• Contact your state’s unemployment insurance program as soon as possible after becoming unemployed.
• File your claim with the state in which you were employed.
• To prevent delays, give complete and accurate information.

Source: U.S. Department of Labor

Before you contact the unemployment office, make sure you have the following information:

• Name, address and phone number for each of your former employers from the last 18 months
• Dates of employment
• Reason for separation from the company
• Your complete mailing address and phone number
• Social Security number
• Driver’s license or state ID

Be prepared to provide additional information as requested. This is especially relevant if you worked in a state other than the state in which you currently live.

Health Care

On March 11, 2020, the IRS issued a release stating that health savings account (HSA)-eligible high-deductible health plans (HDHPs) could pay for COVID-19 testing and treatment for patients who had not yet met their deductibles. This did not interfere with individuals’ contributions to their health savings accounts.

The IRS noted that this provision applied only to HSA-eligible HDHPs and that employees and taxpayers in any other type of health plan with specific questions about their coverage should contact their plan administrator.

The Society for Human Resource Management stated that these plans can also cover telehealth services prior to a member meeting plan deductibles but that standard copays or other cost-sharing may still apply.

In addition, the law allows HSAs, health reimbursement arrangements and flexible spending accounts to cover over-the-counter medications and products as well as feminine hygiene products.

These changes are in effect until Dec. 31, 2020, except for the addition of feminine hygiene products, which is permanent. Purchases of these products from Jan. 1, 2020, are reimbursable.

The act also allows Medicare to cover telehealth care for seniors ages 65 and older.

Additionally, coronavirus testing will be free for all of those who are insured.

Obamacare and COVID-19

On June 25, 2020, with COVID-19 cases surging across the United States, the Trump administration asked the Supreme Court to overturn the Affordable Care Act, which would eliminate health care coverage for roughly 23 million Americans.

The brief was submitted on the same day the Labor Department released the previous week’s jobs numbers. According to the Labor Department, 1.4 million initial unemployment insurance claims were filed during the week ending June 20, 2020, marking the country’s 14th straight week of job losses.

And with these losses — 30 percent of which may be permanent, according to Bloomberg Economics — went employer-sponsored health care coverage.

Speaking to PBS NewsHour, former acting administrator of the Center for Medicare and Medicaid Services, Andy Slavitt, said that if Obamacare was overturned in the middle of the pandemic, “23 million people will no longer be able to take care of their families if someone should get sick from COVID or anything else.”

The effects of repealing the Affordable Care Act could extend beyond getting treatment for COVID-19. If someone has tested positive for the virus, it can be considered a preexisting condition, which would mean their insurance company could deny coverage for complications later.

Mortgages and Housing

ABC News reported on Nov. 23 that 6.6 percent of all mortgages are in some stage of delinquency. At that time, homeowners had only 40 days left to apply for help under the CARES Act.

Mortgage rates were at all-time lows in early spring, but the flurry of buyers who would have jumped on these rates before the pandemic were skittishly watching unemployment numbers rise and the stock market fall. Meanwhile, lenders were inundated with refinance applications.

The full effects of the coronavirus on the housing market vary from state to state, but for people who are having trouble making their mortgage payments or rent, the CARES Act has established a few guidelines. Remember, though, these relief measures are set to expire soon.

Mortgage Forbearance

For homeowners with federally backed loans, the CARES Act offers forbearance for up to six months.

The Federal Housing Finance Agency (FHFA) will also provide payment forbearance for up to 12 months to borrowers experiencing hardship caused by the coronavirus.

Assistance may be available to people with privately owned mortgages, but the terms may not reflect those outlined in the CARES Act.

Homeowners with mortgages insured by Freddie Mac and Fannie Mae may have already received notification of the 90-day forbearance from their loan servicers. If you have not received a notification or if you do not know who owns your mortgage, you can contact your servicer for assistance.

What to do if you can’t make your mortgage payments:

• Contact loan servicer immediately
• Check American Bankers Association (www.aba.com)

Your loan servicer is the entity to which you make your monthly payments, but that is not necessarily the entity that owns your mortgage.

The Mortgage Electronic Registration System (MERS) database keeps track of this information. You can look up your servicer and investor using your name, social security number and property address.

But beware of the consequences of accepting the relief offered. In many cases, six months of forbearance — or suspension of payments without penalty — will ultimately amount to homeowners being required to pay a lump sum at the end of the forbearance period.

Moratorium on Evictions and Foreclosures of Government-Backed Loans

The U.S. Department of Housing and Urban Development issued a letter on March 18, 2020, announcing a 60-day foreclosure and eviction moratorium for all FHA-insured Single Family mortgages.

The letter was effective upon the date of issue and urged Americans to “remain in their homes to stem the tide of COVID-19.”

The moratorium, however, applies only to FHA-insured mortgages for single family homes. This excludes millions of American homeowners and doesn’t offer solutions for after the moratorium period has expired.

In addition, the FHFA announced that it would suspend foreclosures and evictions for at least 60 days for all Enterprise-backed loans — that is, mortgages insured by Fannie Mae or Freddie Mac.

The director of the FHFA, Mark Calabria, said in a March 18, 2020, news release, “As a reminder, borrowers affected by the coronavirus who are having difficulty paying their mortgage should reach out to their mortgage servicers as soon as possible.”

According to The Washington Post, more than 40 million renters and 5 million homeowners with mortgages not backed by the government were not eligible for relief measures, noting that those who did qualify may have been able to stay in their homes for the time being, but would find themselves in dire straits when the time came to remit the suspended payments.

Rent Relief and Protection from Eviction

The CARES Act contained a provision that prohibited rental evictions from properties secured with federally backed loans for 120 days. The moratorium also applied to evictions from federally subsidized housing.

In addition, at least 34 states issued moratoriums on evictions, but the orders differed from state to state.

In Delaware, the governor banned evictions for as long as Delaware was under a state of emergency and ordered up to $1,500 in assistance for renters who were laid off or furloughed as a result of the COVID-19.

If you are unsure of the moratorium status in your state, contact the city government or check your state government website for assistance.

What to do if you can’t pay your rent:

• Talk to your landlord
• Budget for missed rent payments that you will have to pay later

Source: U.S. Department of Labor

Small Businesses

Interest-free loans for eligible small businesses were a central component of the act, which provided $377 billion in federally guaranteed loans to small businesses and $500 billion to large companies and airlines.

Small businesses were exempt from repaying eight weeks’ worth of the 10-week loans if they retained their employees or rehired employees who had been laid off by June 2020.

Employee Retention Credit

According to the IRS, the refundable employee retention tax credit was 50 percent of up to $10,000 in wages paid by an eligible employer whose business had been financially impacted by COVID-19.

Eligible employers included those whose businesses were fully or partially suspended by government order due to COVID-19 during the calendar quarter or whose gross receipts were below 50 percent of the comparable quarter in 2019.

How to claim:

• Report total qualified wages and related health insurance costs on Form 941.
• If employment tax deposits are insufficient, submit Form 7200 to receive an advance credit.
• Refer to IRS Form 941 Employer’s Quarterly Federal Tax Return for detailed instructions.

Families First Coronavirus Response Act (FFCRA)

According to the IRS, the FFCRA stipulated that employers must provide paid leave through the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (Expanded FMLA).

Employers with fewer than 500 employees qualified for refundable tax credits to reimburse for the cost of providing 80 hours’ worth of paid sick and family leave related to COVID-19.

Leave applied to employees who needed to care for themselves or others who had contracted COVID-19 or for workers who had children whose school or childcare provider had closed for coronavirus-related reasons.

How to claim:

• Report total qualified leave wages and related credits for each quarter on Form 941.
• Access federal taxes that are required by the IRS or request an advance from the IRS.

The IRS has a procedure that allows eligible employers who do not have sufficient federal employment taxes set aside to obtain an advance of the credit.

How to obtain an advance of the credits:

• Reduce remaining federal employment tax deposits for wages paid in the same quarter to zero.
• If permitted reduction doesn’t equal the qualified leave wages, file a Form 7200.
• If you have not paid qualified leave wages in an amount that exceeds required deposits of federal employment taxes for the quarter, do not file a Form 7200.
• Refer to IRS Form 7200 Advance Payment of Employer Credits Due to COVID-19 for detailed instructions.

Paycheck Protection Program

According to the U.S. Department of the Treasury, under the CARES Act all businesses with 500 or fewer employees were eligible for the Paycheck Protection Program, which provided funds to pay up to eight weeks of payroll costs, including employee benefits, interest on mortgages, rent and utilities.

No fees or collateral were required, and the loans would be fully forgiven. Payments were deferred for six months.

Eligible businesses:

• Nonprofits
• Veterans organizations
• Tribal concerns
• Self-employed workers: Apply starting April 10, 2020
• Sole proprietorships: Apply starting April 3, 2020 (along with small biz)
• Independent contractors: Apply starting April 10, 2020

All loans had the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.

The Paycheck Protection Program ran out of money on April 16, 2020. However, a follow-up relief package allowed for an additional $310 billion for the program, including $60 billion for emergency loans and grants. The legislation dictated that this funding go to small lenders that serve small businesses in rural communities, which were particularly vulnerable to the economic impact of the coronavirus pandemic.

Payroll Taxes

Employers were permitted to delay paying their portion of social security taxes and certain railroad retirement taxes for the period beginning March 27, 2020, and ending Dec. 31, 2020.

The IRS required that 50 percent of the deferred payroll taxes be paid by Dec. 31, 2021, and the remainder be paid by Dec. 31, 2022.

Retirement Plans

Martin Tillier, contributor to nasdaq.com, had a little bit of good news for Americans who were afraid to look at their retirement account balances back in the spring.

According to Tillier, although Dow lost around 23 percent from the close of the last quarter of 2019 to the close of the first quarter of 2020, it didn’t necessarily mean that everyone’s 401(k) would mirror the decline.

Retirement funds that had been allocated strategically — meaning your money was invested in a target fund or otherwise diversified — were safer than many people thought they were.

In November, The Washington Post reported that, by and large, Americans were conservative regarding the allowances the CARES Act offered.

“From April until the end of October, 1.3 million individuals had taken a Cares Act distribution from their retirement account, representing about 5.2 percent of eligible employees. The average distribution amount was $10,000, and the median was $3,000,” according to The Post.

Of course, people who withdrew money from their retirement accounts will have a gap in their savings, but many plan providers expected worse, and because people haven’t taken more than they needed, it won’t be as difficult to make up for withdrawals.

401(k) Loans

According to the Society for Human Resource Management, the CARES Act allowed for 401(k) loan limits equal to the lesser of $100,000 or 100 percent of the participant’s vested account balance for the six months following the passage of the act. This was twice the standard limits.

Participants who had existing loans whose repayments were due between March 27, 2020, and Dec. 31, 2020, could extend their repayments for up to one year.

Coronavirus-Related Distributions

Under the CARES Act, employers could offer 401(k) plan participants and employer-sponsored IRA account holders affected by COVID-19 coronavirus-related distributions, for which employees would not incur a 10 percent penalty for early withdrawal. These distributions could not exceed $100,000, and plan participants had three years to pay them back.

Furthermore, participants who took these distributions were allowed to spread the payment of the income taxes owed over three years. These payments did not count toward annual contribution limits.

Not all employers offered this benefit.

Required Minimum Distributions

Retirees ages 72 and older were not required to take required minimum distributions (RMDs) from their tax-deferred 401(k)s and IRAs throughout 2020.

This provision, which was not limited to people affected by COVID-19, was helpful because RMDs are calculated by dividing the last Dec. 31 balance by a life expectancy factor.

As Certified Financial Planner™ professional Rose Swanger told USA Today, “Had we used that to calculate the RMD, every retiree will have a higher inflated amount than what they see now on paper.”

Swanger went on to explain that skipping one year would help retirees recoup their investment and mitigate the tax impact.

Annuity Contracts & Life Insurance Policies

In some states, governors issued executive orders to provide relief to life insurance and annuity policyholders.

For example, New York Governor Andrew Cuomo signed an order to “extend to ninety (90) days the grace period for the payment of premiums and fees set forth in the policy, contract, or certificate if you demonstrate financial hardship as a result of the COVID-19 pandemic.”

The Emergency Regulations and Executive Order ensured that the policy or contract would not be terminated due to the contract holder’s failure to pay the premiums during the extended grace period.

Credit and Loans

The CARES Act provided credit protection for people whose accounts were previously in good standing. Companies would report your account status and payment history as current for 120 days after the end of the national emergency declaration.

This applied only if your account was not delinquent prior to the pandemic. Additionally, this was not an automatic process, so if you required credit protection, you had to contact lenders and credit card companies to apply for a hardship program.

To see if you are still able to apply for assistance, call the number on the back of your credit card or log in to your account online.

Depending on the lender and your individual circumstances, you may be eligible for:

• Monthly service fee waivers
• Overdraft fee waivers
• Minimum balance fee waivers
• Late payment fee waivers
• Interest charge waivers
• Credit line increases
• Forbearance programs that allow you to defer minimum payments
• Other hardship programs

Experts recommend you take advantage of these provisions only if you absolutely must. If you are able, your best strategy is to continue to make your minimum payments.

They also suggest keeping an eye on your credit card balances. The higher your credit card balances, the higher your debt-to-income (DTI) ratio, which will hurt your credit score.

Most lenders consider a DTI ratio of 35 percent or lower favorable. This means that 35 percent or less of your monthly gross income goes to paying debt. When your DTI exceeds 35 percent, it can affect your ability to be approved for loans.

The key to protecting your finances during and after the coronavirus pandemic is making smart decisions about whether to take the assistance you are offered. Assess your situation, make adjustments where you can and continue to monitor your finances.

Most importantly, be persistent and patient. You will encounter obstacles — overloaded systems, overworked representatives, long wait times and short fuses. But communication is crucial to staying afloat financially during this challenging time.

Federal Student Loans

All federal student loan payments were deferred until Jan. 31, 2021. Interest was not accrued during that time.

Staying Afloat Financially During the Pandemic

The Financial Industry Regulatory Authority has warned the public of coronavirus scams and offers tips for investors during the pandemic.

In addition, FINRA has been diligently monitoring the insurance and investment industry to protect consumers, especially adults ages 65 and older and adults ages 18 and older who have a “mental or physical impairment that renders the individual unable to protect his or her own interests.”

According to the organization, “The economic impacts of the coronavirus pandemic are forcing many families to make tough financial decisions, but selling investments at a market low means you are locking in that loss rather than waiting for markets to improve.”

For this reason, any decisions you make to lessen the impact of COVID-19 on your finances should be carefully considered.

Whether you decide to defer your student loan payments, withdraw money from a qualified retirement plan, sell your annuity or structured settlement payments or take advantage of any other type of financial hardship waiver or grace period, make sure you have a plan for the future.