The coronavirus outbreak is crushing the U.S. economy. We’re in a bad place. However, Congress and the Trump administration worked together on a stimulus package. Besides, the Federal Reserve lowered interest rates, and the IRS provided relief to taxpayers.
Despite of that, the stock market is tanking, businesses are closing, and unemployment claims are spiking. Also, consumer spending is down sharply, 2020 GDP estimates are dropping fast, and a recession is on the way. What we want to stress here is that the scenario is critical.
Within this context, the stimulus checks will actually be advanced payments of a new tax credit. It is added by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The checks will be worth up to $1,200 for each taxpayer ($2,400 for married couples who file a joint return), plus $500 for each qualifying child 16 years old or younger that you have.
Understand how you could benefit from the stimulus package
The good news is the tax credits for the self-employed. While they don’t get the same sick and family leave benefits available to employees, the Families First Coronavirus Response Act provides self-employed people with two refundable tax credits. They are tied to the amount of time they can’t work because of the coronavirus outbreak.
The sick leave credit compensates self-employed people for up to 10 days away from their business. All for a reason that would entitle them to coronavirus-related sick leave if they were employees. The family leave credit covers up to 50 days away from work for any reason that would qualify an employee for coronavirus family leave.
While some of the economic stimuli will prop up businesses, many initiatives will flood the economy with cash. Thus, they will directly benefit ordinary Americans who are facing a financial hit.
Another good advantage is the student loan relief. Student loan debt can be a heavy burden in the best of times. Lawmakers recognize this. That’s why there are several student loan relief measures in the CARES Act.
First, student loan payments will be deferred until September 30, 2020. All without penalty or interest for all federally-owned loans. This covers over 95% of student loan borrowers. The government also will suspend collection activities against borrowers who were already behind on payments.
In addition, students who leave school for a coronavirus-related reason will not have to worry about student loan obligations. Besides, they won’t have to return grants. Likewise, students participating in work-study programs will still receive their money if they’re unable to fulfill their obligations because of the coronavirus pandemic.
The stimulus package could help you in many ways in 2020. The federal government made several moves in the economy and we all hope this will turn things around.