Weekly Digest – 7 April 2020

“Unprecedented” is a word that’s been tossed around a lot during the COVID-19 pandemic – and that’s because almost everything around it has been. So far, more than 1.3 million people have been infected, and over 73,000 have died. The recent CARES Act was the biggest in history at more than $2 trillion. U.S. unemployment is currently estimated at 13%, and could soar to 20%.

In the face of these unprecedented circumstances, we’ve been putting together resources to help you navigate what’s out there.

FEDERAL CARES ACT

Besides the much-publicized economic impact checks and the business lending options, the CAREs Act also includes plenty of other useful provisions. Let’s take a look at some of these.

Expansion of unemployment programs

The CARES Act includes three new programs and eliminates the one-week waiting period that most states impose. These new programs are not available to persons who:

  • Can work from home with pay.
  • Are currently receiving paid sick leave or paid leave.
  • Are undocumented.

All of these programs are administered at the state level, so application is through each state’s Department of Labor.

Pandemic Unemployment Assistance (PUA)

This extends unemployment benefits to people who are normally shut out of unemployment such as self-employed, independent contractors, or those who have used up their state benefits. Up to 39 weeks of benefits are available through December 31, 2020. Benefits can be retroactive to January 27, 2020. Recipients will receive a minimum benefit of one-half of that state’s average benefit.

Eligibility requirements for PUA:

Applicants must self-certify that (a) they are partially or fully unemployed OR (b) they are unable to work for one of these COVID-13 related reasons:

  • They have a diagnosis of COVID-19 or symptoms of COVID-19 and seeking a medical diagnosis.
  • A member of their household has been diagnosed with COVID-19.
  • They are providing care for someone diagnosed with COVID-19.
  • They are caring for a child or household member who can’t attend school or work due to COVID-19 closures.
  • They are quarantined or have been advised by a health care provider to self-quarantine.
  • They were scheduled to start work and do not have a job or cannot reach their place of employment because of a COVID-19 outbreak.
  • They are now the family breadwinner because the head of household has died as a result of COVID-19.
  • They had to quit their job as a direct result of COVID-19.
  • Their place of employment is closed as a direct result of COVID-19.
  • They meet other criteria established by the Secretary of Labor.

Pandemic Unemployment Compensation (PUC)

Through July 31, 2020, anyone eligible for PUA or the regular state unemployment program, will automatically get an additional $600 per week on top of the regular state unemployment benefit. This includes anyone already getting unemployment and new applicants.

Pandemic Emergency Unemployment Compensation (PEUC)

This program adds an additional 13 weeks on to the regular state unemployment benefits. Like regular unemployment benefits, recipients need to be actively seeking work. However, states are instructed to “provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”

More details about the various unemployment programs are on this fact sheet. Gusto has compiled detailed information about various resources by state. CareerOneStop.org has links and more information about programs in each state.

Penalty-free withdrawals from IRAs, pensions and 401(k)s

The 10% penalty for early withdrawals of up to $100,000 from retirement accounts is waived for 2020. The funds must be used for reasons related to the pandemic, which includes not being able to work due to lack of childcare, or caring for a family member who is sick with COVID-19.

Staff from Senator Grassley’s office has prepared this list of FAQs on retirement account withdrawals.

Additional Guidance for the CARES Act

The CARES Act was enacted in record time, so it’s not surprising there have been a few hiccups. Here are some recent updates so you know what to expect.

Economic Impact Payments (aka Stimulus Checks)

Payments to retirees:
If your only income is Social Security or retirement from the Railroad Retirement Board, you do not need to file a tax return or do anything. You will receive a direct deposit of $1,200 to the bank account where your monthly payments usually go.

When will I get my payment?

If the IRS has your banking information from your 2018 or 2019 tax return, you may receive a payment as soon as April 15. According to internal sources at the IRS, lower-income taxpayers are to be prioritized. If the IRS does not have your banking information, you’ll receive a check in the mail, but you may not receive it until September. The IRS is working on developing a portal for taxpayers to update their banking information. In the meantime, keep checking the official IRS page for Economic Impact Payments.

Watch out for scams related to this program

The IRS has noted an uptick in fraudulent advice and phishing campaigns related to the economic impact payments. Seniors especially need to beware of phone calls, emails or even door-to-door offers to speed up receipt of payments. The IRS will not call, email, mail or visit you in person to update your banking information or to verify your personal information. These scammers will likely take the money and vanish.

Paycheck Protection Program (PPP)

On Friday, April 3, banks began accepting applications for this program. Bank of America reported that that they had processed 85,000 requests for a total of $22.2 billion on the first day. Self-employed people and independent contractors can begin applying on Friday, April 10.

Despite the language of the law, which intends that this program be available to all small businesses, the banks administering this program are apparently applying their own criteria. Some will not accept applications from anyone who does not have a business bank account with them, and some are even requiring that applicants have active loans or credit cards with them. Credit unions can’t participate in SBA programs at all, so you may need to seek out another banking partner to receive funding.

In addition, as many tax professionals have noted, the guidance provided by the SBA and the language of the statute are not entirely clear or consistent, and the banks are consequently making up their own rules.

One big sticking point is the calculation of the amount an applicant can borrow, which is set at 2.5 times monthly payroll costs. This sounds simple, but the amounts included monthly payroll costs are not entirely clear. Does this include federal taxes withheld from employee’s pay? If an employee is paid more than $100,000, can we include $100,000 for that employee in the calculation, or is that person completely excluded from the calculation? Until guidance from Treasury or the SBA clears the confusion up, applicants will have to use the definition that each individual bank uses.

WORKING FROM HOME

Zoom Security Failure Are you using Zoom for conference calls or online meetings? You’ll want to be sure to read this notification from Zoom about security settings, and consider requiring a password from participants. Without a password, anyone with the meeting ID can join. Because of this loophole, many meetings have been “Zoom bombed” by uninvited participants who post inappropriate images or disrupt meetings with annoying sounds.

Gallup Study Confirms Effectiveness of Remote Work Back in January, before the COVID-19 pandemic forced everyone who could work remotely to do just that, the Gallup organization published a story that confirmed “that remote workers are more productive than on-site workers as well.” However, many remote workers are also now juggling day care and supervising school work, and, according to Stanford economist Nicholas Bloom, “Working from home with your children is a productivity disaster.” This article from freeCodeCamp has some useful tips for making the best of a challenging situation.

GENERAL RESOURCES

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!

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