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CARES Act Benefits Ending - How can you prepare yourself?

lifestyle Dec 14, 2020

As 2020 comes to a close, many of the CARES act benefits are ending as well. Congressional debates continue, but a new stimulus bill hasn't been passed. Make sure you know what you can expect moving into 2021. 

The following benefits are set to end in the next few weeks:

  1. Unemployment benefit extensions - When the initial bill was passed, unemployment benefits were extended from 26 weeks to 39 weeks, with an additional $600 per week (which ended several months ago). The benefit extension to 39 weeks will end Dec 26th. There is talk of benefit extensions in 2021 with an additional $300 per week, but this has not been passed by Congress.
  2. Employer incentive to help pay down student loans - Employers can contribute up to $5,250 towards an employee's student loans in 2020, which is excluded from income and employment taxes. This benefit ends December 31st. 
  3. Charitable contribution benefit - If you normally take the standard deduction, you can deduct $300 of charitable contributions from your adjusted gross income. This is for the 2020 tax year.
  4. Penalty waiver for early retirement account distributions - Those under age 59 1/2 can take a distribution of up to $100,000 without paying the traditional 10% penalty from a 401(k) or 403(b). Taxes are still owed, although this can be spread out over several years. This benefit ends at the end of 2020.
  5. Residential evictions banned - This will end Dec 31st. 
  6. "Gig workers" or freelance workers unemployment benefits - These types of workers will no longer qualify for unemployment benefits as of Dec 26th. 
  7. Required paid sick leave for COVID19 related absence -  The FFCRA (Families First Coronavirus Response Act) requires public employers and private employers with fewer than 500 employees to provide paid sick and family leave to employees affected by COVID19. This expires December 31st.


The following benefit has been extended to January:

  1. Federal student loans payments are on auto-deferment - This has been extended until January 31st, 2021, which includes a pause in interest accrual and required collections. Months with no payments will continue to count for income driven repayment plans or Public Student Loan Forgiveness. 


As these benefits come to a close, make sure you have a plan in place for 2021. It is anticipated that 66% of Americans receiving unemployment benefits will lose them by December 26th. If this will be you, start prioritizing bills now and creating a plan moving forward. If you know you can't cover essentials like food and shelter, consider an early retirement account distribution before this benefit ends December 31st. It's important to note that even if unemployment benefits are extended, there may be a significant time lag. It took a full month for this benefit to be paid out by all states after being passed in March. 

If you are paying back student loans, take advantage of the remaining 6 weeks that federal student loans are not accruing interest or requiring payments. Use this time to either build an emergency fund or pay off other high interest debt. If you've already done both of those things, use this opportunity to make extra student loan payments and pay down your principle. Don't forget to talk to your HR department before the end of 2020 to discuss the current employer incentive to help pay down student loans. This benefit ends in just a few weeks, so act while you can. 

As required paid sick leave will end, consider your financial plan if you are unable to work for several weeks due to personal or family member illness. If you would not normally receive paid time off, create or bulk up an emergency fund in case this occurs. 

2021 will likely bring new and unique challenges in light of COVID19. I hope this information helps you prepare yourself in the best way you can. 


UPDATE 12/27/20:

A new bill passed through Congress, but is currently in limbo as President Trump rallies for stimulus checks to be increased to $2,000 per individual. Let's review the benefits that will be available within the new stimulus bill, if it passes as is.

  • $600 per individual (including children if they qualify and are under 16) for an adjusted gross income from 2019 up to $75,000 per individual or $150,000 married filing jointly
    • Phases out at incomes of $87,000 for individual and $174,000 for married filing jointly
  • Additional unemployment benefit of $300/week in addition to baseline unemployment benefits starting December 26th (no retroactive payments)
  • Additional unemployment options for "gig workers"
  • Extension of federal eviction ban through Jan 31, 2021
  • Additional assistance available for renters unable to pay rent, if income is below 50% of the local area median income
  • Extension of the Payroll Protection Program for business owners
  • Additional federal funding for the COVID19 vaccine 

Stay tuned to see what happens Monday as the bill is readdressed at the request of President Trump!

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