What You Need to Know about the CARES Act

Brief Overview

The CARES Act is a $2 trillion emergency package signed into law on March 27, 2020 with the intention of mitigating the economic impact of the coronavirus pandemic.(1) Click here to view Spanish version.

It includes:

  • One time direct payments to citizens who filed income tax returns in 2018 or 2019, who could not be claimed as a dependent of another taxpayer, and with adjusted gross income under certain limits(1)
  • One time direct payments to non-citizens living and working in the US with a valid Social Security Number who filed income tax returns in 2018 or 2019, who could not be claimed as a dependent of another taxpayer, and with adjusted gross income under certain limits(1)
  • One time direct payment to non-filers who are citizens or non-citizens with a valid Social Security Number that meet the substantial presence test. Non-filers include those who in 2018 and 2019 had gross income that did not exceed $12,200 ($24,200 for married couples). It also includes those who aren’t typically required to file taxes (such as Social Security beneficiaries, survivor beneficiaries, Railroad retirees, SSI, SSDI)
  • An increase in the amount and an expansion of the eligibility of unemployment benefits(2)
  • Loans (which can be partially or entirely forgiven depending on eligibility) for small businesses and non-profits(3)
  • Free counseling and low-cost training for small businesses(3)
  • Temporary pause on student loan payments and interest


Common Questions

One Time Direct Payments

  • It depends. It’s based on your 2019 tax filing or, if you haven’t done that yet, your 2018 filing. Take a look at this calculator issued by The Washington Post. This article provides a breakdown of how reductions to one time direct payments based on exceeding the adjusted gross income are calculated.
  • Not necessarily. If you filed your 2019 or 2018 tax return and were eligible, the IRS will determine where to send your check and your eligibility from there. You will automatically receive a direct deposit to the bank account listed on your 2019 return, or in the absences of a 2019 return, the 2018 return. If a bank account is not listed, the IRS will mail the check to the address that is listed for either the 2019 or in its absence 2018 return.(4) If you now have direct deposit info or would like to change your direct deposit info and the one time payment has not been scheduled for delivery yet you can visit the IRS Get My Payment portal.
  • Yes. Citizens and eligible non-citizen whose 2019 gross income exceeded $12,200 ($24,400 for married couples) and who have not filed their 2019 taxes should file their 2019 return as soon as possible if it would increase their eligibility.
  • Yes. For non-filers who are typically not required to file taxes (such as Social Security beneficiaries, survivor beneficiaries, Railroad retirees, SSI, SSDI) no further action is needed and you would receive the check the way you normally receive your benefit (direct deposit or paper check). However, if you have qualifying dependent children under 17 visit the IRS Non-Filers: Enter Payment Info Here portal to receive payments of $500 per qualifying dependent child under 17.
  • Yes. For non-filers who do not receive benefits (such as Social Security beneficiaries, survivor beneficiaries, Railroad retirees, SSI, SSDI) and whose gross income did not exceed $12,200 ($24,400 for married couples) you should visit the IRS Non-Filers: Enter Payment Info Here portal to input your info and receive the one time payment if eligible.
  • Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.(4)
  • The IRS has extended the date to file taxes until July 15, 2020
  • For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.(4)
  • Yes — as long as you’re living and working in the U.S. with a valid Social Security number. That includes green card holders, and it generally includes those on work visas, such as an H-1B and H-2A. But it generally excludes visitors and people who are in the U.S. illegally.(5)
  • However, mixed-status households where any member uses an ITIN are ineligible for one time direct payments unless you are filing “Married Filing Jointly” with a 2019 member of the military.(10)
  • You’ll receive the full amount even if you have tax arrears or have defaulted student loans.
  • Child support arrears COULD affect what you receive if the arrears were reported by your state to the Treasury Dept.(5)
  • No. It will not count as income for individuals receiving SSI and/or SSDI.
  • No. It will not count as a resource for means-tested federal benefits programs (Medicaid, SSI, SNAP, housing assistance) for a period of 12 months. Thereafter, it is countable as a resource.
  • IRS will send a letter 15 days after making the payment with options for resolving issues.

Student Loans

  • No payments are required on federal student loans owned by the U.S. Department of Education between March 13, 2020 and September 30, 2020.
  • Student loans are placed in an automatic administrative forbearance
  • During this time, interest will be set to 0% on the following types of loans:
  • Defaulted and nondefaulted Direct Loans
  • Defaulted and nondefaulted FFEL Program loans
  • Federal Perkins Loans
  • While your lender or school can provide these benefits should it choose to do so, you can consolidate your FFEL Program or Federal Perkins loans not owned by ED into a Direct Consolidation Loan, which would be eligible for 0% interest. However, if you consolidate, after the 0% interest rate period ends, the interest rate on your loan may be higher than what you are currently paying. In addition, when you consolidate, any outstanding interest will capitalize, meaning that any outstanding interest is added to your principal balance. Your servicer can provide you with information about how your loan balance, interest rate, and total amount to be paid would change if you consolidated into a Direct Consolidation Loan.
  • No, not during this period. In terms of wage garnishment, per studentaid.gov: Your human resources department will receive a letter from ED instructing them to stop your wage garnishment. If ED receives funds from a garnishment between March 13, 2020, and Sept. 30, 2020, we will refund your garnished wages.


  • Unemployment benefits have been extended from 26 to 39 weeks.
  • In addition to one’s usual unemployment benefit, recipients will receive an additional $600/week starting 4/5/20 through 7/31/2020.(7)
  • Eligibility has been expanded but one still applies through the regular state-specific channels(e.g. NY Dept of Labor)
  • Pandemic Unemployment Assistance (PUA) provides emergency support for workers who are left out of their state’s standard unemployment coverage, workers who have already exhausted those benefits or workers who are unable to work due to certain circumstances caused by the coronavirus pandemic.(6)
  • According to the National Employment Law Project (NELP), those eligible for PUA include: self-employed workers, independent contractors, freelancers, workers seeking part-time work, workers who do not have a long-enough work history to qualify for state UI benefits, and workers who have exhausted their standard state UI benefits. Importantly, those who are eligible for their state’s normal unemployment benefits do not qualify for this special pandemic assistance.
  • You have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis
  • A member of your household has been diagnosed with COVID-19
  • You are providing care for someone diagnosed with COVID-19
  • You are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19
  • You are quarantined or have been advised by a health care provider to self-quarantine
  • You were scheduled to start employment and do not have a job or cannot reach your place of employment as a result of a COVID-19 outbreak
  • You have become the breadwinner for a household because the head of household has died as a direct result of COVID-19
  • You had to quit your job as a direct result of COVID-19
  • Your place of employment is closed as a direct result of COVID-19(6)
  • The PUA program runs from January 27, 2020 through December 31, 2020, and benefits can be received retroactively for qualifying applicants. Eligibility ends on December 31, unless the program is later extended.
  • PUA benefits can be claimed for a maximum of 39 weeks.(6)
  • The calculations are based on the federal Disaster Unemployment Assistance program under the Stafford Act, which means the minimum weekly benefit amount payable is half (50%) of the average benefit amount in the state you apply in. According to the NELP, that’s about $190 per week.(6)
  • Begin by visiting your state’s labor department or equivalent website. For New Yorkers, head to labor.ny.gov. If you are not traditionally eligible for unemployment benefits, begin the standard unemployment insurance application process, and apply for Pandemic Unemployment Assistance.(6)
  • No. Workers must be authorized to work to be eligible for the program.
  • Yes. If you qualify for PUA but do not traditionally qualify for your state’s unemployment insurance, you also qualify for:
  • The Pandemic Unemployment Compensation (PUC): An additional $600 per week through July 31, 2020, and;
  • Pandemic Emergency Unemployment Compensation (PEUC): An extended 13 weeks of coverage provided to unemployed individuals who have exhausted

Self-Employed/Small Business

  • Yes, see above section on Pandemic Unemployment Assistance(PUA) and this guide for applying.

Retirement Accounts

  • Required minimum distributions (RMDs) for Defined Contribution plans – 401k, 403b, and 457 – and IRAs are waived for 2020. Coronavirus-Related Plan Distributions(8)
  • The 10% tax penalty is waived for “Coronavirus-related distributions” of up to $100,000 for a “qualified individual”, defined as an someone who:
  • Is diagnosed with COVID-19
  • Whose spouse or dependent is diagnosed with COVID-19
  • Who experiences adverse financial consequences as a result of
  • Being quarantined, furloughed, laid off, having hours reduced
  • Being unable to work due to lack of child care due to COVID-19
  • Closing or reducing hours of a business owned or operated by the individual due to COVID-19
  • A retirement plan administrator can rely on an individual’s certification that he or she meets these requirements.
  • Additionally, the automatic 20% withholding requirement on these distributions does not apply; instead, individuals have the option for a special tax treatment in which the income taxes from the distribution are spread in equal amounts over 2020, 2021, and 2022.
  •  Individuals can choose to repay the distribution amount to their plan over three years, tax-free, without it counting against the annual contribution limits. The ability to repay these distributions is key.(8)
  • Outstanding loan payments scheduled to be made on or after the enactment date through December 31, 2020, may be delayed for one year without penalty.
  • For a period of 180 days beginning the enactment date, current retirement plan loan limits are doubled to the lesser of $100,000 or 100% of the participant’s vested account balance (from $50,000/50%)
  • The rules requiring consideration of the highest loan balance during the one-year period before a loan is made when applying the loan cap is not changed. (8)
  • these changes are permissive, not mandatory for qualified plans, so employers can decide whether to implement them.(8)