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Friday, April 3, 2020

Resources for Communities: COVID-19 Financial FAQs for Low-Income Individuals and Families


Armanino LLP is providing this Frequently Asked Questions document as a resource to provide practical financial guidance during this turbulent time. It is not intended to be exhaustive and we recommend that anyone in need turns to their local social services providers for more advice.

For additional help, call 211, the most comprehensive source of locally curated social services information in the U.S. and most of Canada.

  1. What are the first steps I should take to protect myself and my family financially?
    • Start by creating a budget. Write down any income that is due to you and savings you may have, and then list your monthly bills.
    • Prioritize your bills by what is most important to keep you safe — housing, food, utilities, your car and whatever else you need. Write down your minimum payment due and when it’s due.
    • Let your creditors know about your financial situation. It’s best to contact your creditors before you miss a payment, so they know you are keeping track and working on the situation. Be sure to keep track of everyone you talk with and any paperwork you share.
    • Look ahead. Consider how you might use the April government emergency relief checks or any expected unemployment benefits. Use any future income to pay those high priority bills that can’t be covered by government resources and that haven’t been put on hold by government authorities.
  2. How do I get help with food costs?
    • Call 211 for referrals to food assistance, paying housing bills, accessing free childcare or obtaining help with other needs.
  3. When will I receive my stimulus check?
    • The Treasury Department and the Internal Revenue Service announced on March 30, 2020, that distribution of stimulus checks will begin on approximately April 20, 2020. They will be distributed automatically, with no action required for most people. Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child. The IRS defines “eligible taxpayers” as those with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
  4. What can I do if I can’t afford to pay my rent or my mortgage?
    • If you’re a renter, you may have heard about federal and state government mandates prohibiting landlords from evicting or charging late fees to tenants, ranging from 60-90 days. This does not mean that tenants get two months of free rent. Each landlord or rental management company will determine how to handle this situation, keeping in mind that delayed rent payments will likely be added onto future rent payments. If you know you will not be able to pay your rent, it’s mandated by some jurisdictions and a best approach to contact your landlord before you miss a payment, so they know you are keeping track and aware of the situation.
    • For homeowners, there is a 60-day delay on foreclosures for borrowers with federally-backed mortgage loans and six months forbearance for those experiencing economic hardships due to COVID-19. The U.S. Department of Housing and Urban Development (HUD)-approved housing counselors can discuss options with you if you’re having trouble paying your mortgage loan or reverse mortgage loan.
  5. What if I can’t afford to make my credit card, car or other loan payments?
    • Credit cards: The FDIC has encouraged banks to consider increasing credit card limits for creditworthy borrowers. The FDIC is also encouraging banks to consider waiving late payment fees on credit cards and other loans. Contact your bank or credit card provider immediately to see whether and how they can help you meet your financial needs. Some banks may consider lowering your interest rate on your credit card account; however, you must request a reduction in the interest rate when you call the bank.
    • Car loans: Several automakers are currently offering payment deferrals for customers experiencing financial hardship. Reach out to your car loan provider before you miss a payment and document who you speak to about possible solutions to the situation.
    • Student loans: The U.S. Department of Education has announced that borrowers with federally-held student loans will automatically have their interest rates set to 0% for a period of at least 60 days. Each of these borrowers will have the option to suspend their payments for at least two months. To request this two-month forbearance, you should contact your loan servicer.
    • GI Bills: To preserve GI Bill benefits, the Veteran’s Administration (VA) has the authority to continue GI Bill payments uninterrupted in the event of national emergencies. This law allows the VA to pay education benefits even if a program has changed from resident training to online training. Also, you will continue to receive the same monthly housing allowance payments that you received for resident training until 12/21/20, or until the school resumes normal operations of resident training. To learn more about options related to the GI Bill benefits, contact the VA’s Education Call Center at 1-888-442-4551.
  6. What if I’ve lost my employer-provided healthcare insurance?
    • If you or your spouse or partner do not have affordable health insurance benefits available through an employer, you can look for a plan on the Health Insurance Marketplace at www.Healthcare.gov. On the marketplace, most people receive financial assistance based on income. It is important to explore the costs for each option.
  7. My employer notified me that I am being furloughed — what does that mean?
    • Furloughed employees have the right to seek new employment, so you may consider taking temporary jobs while on furlough. Additionally, furloughed employees may be eligible for unemployment benefits, depending on the state. Check with your state employment agency for specific rules regarding unemployment benefits. Finally, if your employer’s benefits plan provides an Employee Assistance Program (EAP), you can access support services to help cope with the stresses of being furloughed.
  8. Can I take money out of my retirement or 529 educational savings plan to pay for immediate needs?
    • Retirement Plans: The CARES Act passed on March 27, 2020 allows “hardship withdrawals” from certain retirement plans when you’re faced with an “immediate and heavy” financial need. This now includes if individuals, their spouse, or dependents are diagnosed with COVID-19, and those who have been laid-off, had work hours reduced, or were unable to work due to lack of childcare. Anyone withdrawing funds from their traditional retirement account will have up to three years to pay the taxes due on the money withdrawn, although all early withdrawal penalties will be waived. Another change to these new retirement account “coronavirus emergency” withdrawals is that you can put the money back into your retirement account for up to three years after the withdrawal.
    • 529 Educational Savings Plans: College savings plans do not have penalty waivers for economic hardship or unemployment. Non-qualified distributions from a college savings plan are subject to income tax and a 10% tax penalty on the earnings portion of the distribution.
  9. What can I do if I’m not able to pay my taxes on April 15, 2020?
    • If you need more time to pay any federal or self-employment income taxes that you owe, the U.S. Treasury Department has extended the deadline to pay taxes until July 15, 2020. Tax payments can be delayed with this 90-day extension without incurring interest charges or fees. Before missing the April 15 deadline on other tax-related payments or contributions, check out this IRS website with updated filing and payment deadlines. You can also use Form 9465 to request a monthly installment agreement (payment plan) with the IRS if you cannot pay the full amount you owe on July 15, 2020.
  10. How can I avoid financial fraud schemes?
    • The Federal Trade Commission cautions all households to beware of scams. Keep in mind: The government will not ask you to pay anything up front to get this money. The government will not call to ask for your Social Security number, bank account or credit card number. The CARES Act stimulus checks will not be sent until mid-April or even later. Anyone who says they can get you the money now or asks for your personal information is a scammer.

The information contained herein is general in nature and based on regulations that are subject to change. The information is an overview only and should not be construed as legal or tax advice or advice to take any specific action. Individuals should consult with their personal tax/legal advisors before making any tax/legal-related decisions.

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