Guide to Financial Survival During the Outbreak

With everything going on around the world, you may have noticed that it’s not only difficult to find everyday grocery store items, but also basic information regarding your money.  In the past few days, some new laws have been passed, as well as guidelines on additional government benefits, help for homeowners and renters, small businesses, non-profits, and others.  While you yourself may not necessarily need some (or any) of these benefits, you may know of people who do. If so, please feel free to pass along this information to them.

Here are some topics, links, and potential solutions to issues that we at Lucia Capital Group believe you or others may find useful:

The new paid-leave law

For those who need to take time off because of the outbreak, the coronavirus emergency relief package allows workers a certain amount of paid leave.  There are many exceptions, though, and these changes are only temporary. The leave law is set to expire on December 31.

Most employees at small and midsize firms can receive paid leave if they’ve been employed at that company for a minimum of 30 days.  This applies to government workers as well.

If you qualify, you’re allowed two weeks of paid sick leave if you’re ill, quarantined, caring for sick family members, or you’re looking for a diagnosis or preventive care for the coronavirus.  You may also get up to 12 weeks of paid leave to care for children who have had their school closed or if their child’s care provider is unavailable to work due to the outbreak.

Part-time workers will receive that amount they normally earn over a two-week period of time.  If you’re self-employed, gig workers included (such as Uber drivers), you have to calculate your average daily income and claim it as a tax credit to receive paid leave.

Companies with more than 500 employees are exempt from the rules, though.  Small firms with fewer than 50 workers may also apply for exemptions.

Tax deadline extension

Lawmakers announced on March 20th that the filing deadline for all federal taxes was moved from April 15th to July 15th. If you have a refund coming to you, then you’ll receive it as normal whenever you file. If that’s the case for you, it may be especially prudent to file as soon as possible.

Assuming the July 15th deadline remains in place, you need to be sure to get all of your federal taxes finished by that deadline, as failure-to-file penalties can be stiff.

You may also have state taxes to pay, and your state may have different deadlines or regulations. You can track state changes here on the AICPA website.

Help for small businesses and private non-profit organizations

The U.S. Small Business Administration (SBA) is offering “designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).” If your state’s governor has requested aid, an Economic Injury Disaster Loan assistance declaration issued by the SBA will make loans available to small businesses and private, non-profit organizations.

The SBA says that these loans may be used to pay “fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.”  Because these are loans, interest will be charged, but it is set at 3.75% for small businesses and at 2.75% for non-profits.

Additionally, to help keep payments affordable, SBA offers loans with long-term repayments — up to a maximum of 30 years. Terms of each loan are determined by the SBA on a case-by-case basis, based upon each borrower’s ability to repay.

You can find more information at this link.

Help for homeowners and renters

If you or someone you know is facing difficulty making a rent or mortgage payment as a direct result of the coronavirus outbreak, the US Department of Housing and Urban Development (HUD) has announced a nationwide moratorium on evictions and foreclosures.  You can find the details here at this link.  If you’re a homeowner with a mortgage owned by Freddie Mac or Fannie Mae, or you have a loan backed by the Federal Housing Administration (FHA), they will suspend evictions and foreclosures for a minimum of 60 days (including those that are already in progress).  If you’re not sure who owns your mortgage, you can search your address at this government website.

Help with Social Security

The SSA has said they’re temporarily closing until further notice more than 1,200 offices across the country, which is where people often get help applying for their benefits (retirement, Medicare, disability, etc.).  You can still reach them via telephone at (800) 772-1213, as well as at their website (ssa.gov), for help with most routine services like benefit claims or requesting a new Social Security card. Benefit payments to Social Security recipients are NOT affected.

The SSA will keep field offices available for in-person help for only a few crucial services, such as reinstatement of benefits under dire circumstances, people in dire need of SSI or Medicaid eligibility.  To get help with those, you must call the Social Security office first.

Keeping the lights on and the internet working

A sizable number of internet companies and some utility providers have agreed not to cut services to people for nonpayment.  Comcast, Sprint, Verizon, Cox, AT&T, T-Mobile, RCN and a few others have said they will not terminate services for both residential and small business customers who can’t pay due to the virus outbreak.  You can find a full list of companies on the Keep Americans Connected page at the FCC website.

If you as a small business owner or residential customer are in that situation, it’s advisable to call your utility or internet service provider to see if they require proof to receive relief or if it’s simply offered automatically to everyone.

There are also some water service providers that are temporarily suspending shut-offs for nonpayment.  Again, it’s probably a good idea to contact your provider for clarification. For quicker information, check your utility and ISP websites on either their home page or in their “latest news” section.

Other areas of interest

Banking: Almost all of the major banks across the country have either modified or at least clarified how they’re willing to help people affected by the outbreak.  Some lenders have allowed consumers to skip payments without accruing interest under certain conditions, while others are offering forbearance and deferred payment options.  The American Bankers Association has posted a list of banks and what they’re willing to do for you. You can find it at this link.

Student loans:  While some relief has been granted on student loans, it may not be as good as you thought.  It was a waiver of interest on loans, not a waiver of the payment itself. In other words, if you have a student loan held by a government agency, your monthly payment will not go down; it will simply go entirely toward principal.  If you pause your monthly payment because of a hardship (what’s known as forbearance), outstanding interest would normally continue to accrue. Under the new rules, the interest accrual will not happen for as long as the waiver remains in effect.

Updated 3/20/2020: The U.S. Department of Education announced on March 20th that they would waive interest on student loans, and that borrowers could suspend loan payments for at least 60 days “without penalty.” Borrowers will have to reach out to their lenders on their own, either online or by telephone, to initiate that pause, according to the Department, and the forbearance will be in effect for a period of at least 60 days, beginning on March 13, 2020.

Important Information
The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

The information provided is based on current laws, which are subject to change at any time. Lucia Capital Group is not affiliated with or endorsed by the Social Security Administration or any government agency.

Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at www.ssa.gov, or call (800) 772-1213 to speak with an SSA representative.

All investments involve risk, including potential loss of principal.

Advisory services offered through Lucia Capital Group, a registered investment advisor. Securities offered through Lucia Securities, LLC, member FINRA/SIPC, and an affiliate of Lucia Capital Group. Registration with the SEC does not imply a certain level of skill or training. Registered representatives of Lucia Securities, LLC only conduct business in the states where they are currently licensed. Registration with the SEC does not imply a certain level of skill or training.

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