• Matthew Broom

What Firefighters Need to Know About the CARES Act

Unless you social distance by living under a rock somewhere out in BFE, you've probably heard that Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

While millions of people are stuck at home watching the news and gradually losing their minds, public safety and healthcare workers are out there getting after it.

If you haven't had the time to keep up with it, these provisions may affect you.

Side note:

Before we leap into that, think about your current situation. If this pandemic has financially harmed you, what could you have done to be more prepared? Because, even though no one saw this coming, the fact is, we never see it coming. But bad times always come.

So, be prepared.

When you operate on a budget, have an adequate emergency fund, and live a debt-free lifestyle, tough times are manageable. Heck, you might even benefit from them.

If you are hurting now, remember that pain when you get back on your feet. Use it as motivation to build a solid financial foundation so that when a storm shows up, you can weather it.

(Back to the CARES Act)

Recovery Rebates

Should you be expecting a check from Uncle Sam?

Let's find out.

The recovery rebate is a refundable income tax credit against your 2020 income of up to $2,400 for married couples filing jointly or $1,200 for individuals. For each child the taxpayer has under the age of 17, the credit is increased by $500.

Your one-time credit will be reduced and phased out if you earned over a certain threshold, depending upon your filing status.

If you have filed your 2019 taxes, the IRS will use that income to calculate your rebate; otherwise, they'll use your 2018 tax filing.

The phase-out for recovery rebates starts at an adjusted gross income of:

  • $150,000 for married couples filing jointly

  • $112,500 for head of household filers

  • $75,00 for all other filers.

Your rebate will be reduced by $50 for every $1,000 your income is above the applicable threshold.

Jake and Jill are married, have two kids (ages 4 and 7), and file a joint return. They have not filed their 2019 income taxes yet, but their adjusted gross income in 2018 was $125,000.
They are eligible to receive the maximum recovery rebate of $2,400 + $500 + $500 for a total of $3,400.
If their adjusted gross income was $175,000, they would have only qualified for $1,150 + $500 + $500 for a total of $2,150.

Unemployment Benefits

The CARES Act greatly expands unemployment compensation benefits.

If you are a professional firefighter/EMT/paramedic, unemployment is (probably) not an issue for you currently, but that may not be the case for your spouse. And if your family is hurting due to lost wages, the expanded unemployment benefits could help.

The CARES Act provides states the ability to increase unemployment benefits (through federally funded dollars) by $600 per week for up to four months.

So eligible workers (which now includes self-employed, independent contractors, etc.) will see a significant increase over their regular benefit.

Also, the CARES Act has waived the standard one-week waiting period before qualifying for unemployment compensation. Furthermore, the maximum amount of time benefits can be received has been increased by an additional 13 weeks.

Other provisions…

I wish I had the time and the mental stamina to cover more of the CARES Act, but 880 pages is a lot to digest. And the story isn't that exciting. But, some of the other provisions to be aware of are:

  • Student loan payments are deferred until 9/30/2020.

  • Required Minimum Distributions are waived in 2020.

  • Certain small businesses may qualify for loans to cover payroll and other expenses. These loans are eligible for full or partial forgiveness and have a maximum interest rate of 4%.

  • COVID related distributions (from IRAs or other retirement plans) of up to $100,000 are exempt from the 10% penalty. They are eligible to be repaid over three years while also spreading the income over three years.

If you are on the frontlines of this virus, whether a firefighter, paramedic, cop, nurse, doctor, etc. thank you for what you do and stay safe.

Disclaimer: All written content on this site is for information purposes only. Opinions expressed herein are solely those of the author, unless otherwise specifically cited. Material presented is believed to be from reliable sources, and no representations are made by the author as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.