Written by Ben Rosholt, Wealth Advisor
The introduction of new economic news appears to be slowing. This makes for a good opportunity to revisit some areas that could benefit from some additional details.
- Banks are responding to this crisis better than in any prior economic disruption.
- You may be getting an “Economic Impact Payment” from the government.
Banks are trying to help
If you are still angry at the way the large banks handled the housing crisis bail-out, you wouldn’t be alone. I’ll never forget how they took money from the government and gave themselves bonuses! But this time, they are taking action that can actually help Americans.
The majority of banks have begun offering programs to defer payments on homes and automobiles. Make no mistake, they aren’t doing this to be nice. They realized in the late 2000’s that foreclosing on people is bad business. It is much better for them to allow borrowers to suspend payments and simply extend the loan. Regardless of the motivation, the impact is real. I am begging you…if you (or a loved one) have experienced a change in cash flow due to the COVID-19 epidemic, PLEASE contact your bank. This is not a time for pride. This is a time for swift and immediate action.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
There has been much talk about the $2 trillion ($2,000,000,000,000) stimulus package. It is far too soon to know if it will have the desired results, but we are finally getting more clarity on the moving pieces. One of the mysteries is who will be getting the “Economic Impact Payment” and when will it arrive.
Let’s tackle the simple part first. Payments will be issued via the same method as your most recent tax refund. The vast majority of people will not be getting a check, but rather a direct deposit to the same account that was used when you last filed taxes. Those who are expecting an actual check will be waiting a LONG time. Current estimates are that they will be mailed in August. However, you will have the option to register a bank account and expedite the process.
Where this gets complicated is with tax filers who typically have to pay in. For me, it’s been years since I have had a refund. I have no idea what bank was last used for a tax refund. When you realize that my situation is fairly common, you can see that this is a much bigger issue than upon first glance.
The much more complicated piece is “who is eligible for the payment?” Rather than explaining all of the factors, simply locate your Adjusted Gross Income and follow the link below.
Locate your most recent federal income tax return (form 1040).
Your “Adjusted Gross Income” can be found on line 8b (or line 7 if using the 2018 return)