by Diane Kennedy
We learned a lot from the 2008-2009 Great Recession. As a CPA and real estate investor, I learned that sometimes there was absolutely nothing you can do to save a bad deal. I learned that people often hang on to an old way of life much too long, putting their future in jeopardy. I learned that some people never recover, emotionally, from a financial loss while others bounce back, stronger than ever.
It might be too early to make your walk-away plan, but it’s never too soon to look at your options. Where are you right now?
Your goal right now is to look at how you can have more money coming in and less money going out. There are some government programs and lender programs to help. Remember, though, that these are only temporary fixes. But as a taxpayer, you may be eligible to get this money and it may help you survive the pandemic financially.
(Editor’s Note: I’m well aware that many people have no interest whatsoever in taking help from the government. This being said, you may be eligible for certain programs that have recently been introduced. This money may help you survive if you’ve lost your job or lost income due to the pandemic. Nobody is twisting your arm and forcing you to take this money but if you are struggling to survive financially, here’s what you need to know about these temporary fixes. ~ Daisy)
As we move into a new economy, you’re most likely going to need new strategies. For now, let’s get you through the next couple of months. Then, look at what’s next for you and your family.
Let’s start with the money that comes into your household. Cash flow in.
The Government Economic Stimulus Payment
The economic stimulus payments have begun to be distributed, but it’s an uneven roll-out.
If the IRS doesn’t have your direct deposit information, they’re going to mail a check to the address you used on the last tax return you filed. But it could take a while. They’ve estimated it will take 5 weeks to get all of the checks mailed that they know about.
If you want your payment faster, go to the irs.gov portal. If you haven’t filed 2018 or 2019 because the amount of taxable income you had was under the income threshold ($12,200) click on the “non-filer” button. If you have filed 2018 or 2019 and the IRS doesn’t have your direct deposit information, click on “Get My Money.” This is also the portal you’ll use to find out the status of your payment.
If they can’t find your record, it could be because they think you weren’t due a payment, because you have SSI (social security disability), VA benefits, or because of some glitch in their system. Just keep checking back at irs.gov.
The stimulus payments are not a lot and, at this point, it’s just a one-time thing. But it is something.
Pandemic Unemployment Insurance (PUI)
A more interesting program is the Pandemic Unemployment Insurance (PUI) addition to regular unemployment. Under PUI there are some important changes:
- The waiting period for unemployment is gone,
- The federal government will give you an additional $600 per week on top of what the state gives you.
- The additional $600/week will last from 3/29/2020 -7/25/2020,
- Self-employed persons and people who didn’t work the minimum amount that is normally required for unemployment will qualify,
- General unemployment insurance payments will last for 39 weeks.
The states are responsible for making this happen and most of them have not done so yet. It doesn’t mean you won’t get the money. It just means you have to wait a little longer.
Reduce the cash going out
Now, let’s look at what you can do to reduce the cash going out of your house.
The most common forms of debt payments in the American household are home mortgage, car payments, and credit card payments. There are some options to reduce or delay some of your current payments.
It doesn’t mean less debt. In fact, it usually means more debt because of additional interest costs, But at least you don’t have to pay right now.
The term for not paying your mortgage is forbearance. That means your mortgage payments are not currently due. Currently, government-backed loans are mandatory 3-12 months forbearance periods.
If you have a Fannie Mae or Freddie Mac backed loan, the lender is required to give you several options for paying back the missed payments. This is important! The last thing you want is to skip 3 months of payments through forbearance, and then find out the lender is going to collect all 4 payments in the next month or start foreclosure right away.
These options they are now told they have to offer are:
- A loan extension so that the missed payments are added to the end of the mortgage
- A loan modification so that the monthly mortgage payments are reduced
- A repayment plan so that the forborne amount is spread out over several months’ time
- A full lump sum repayment
For more information on these new rules, go to this article.
If you’re not sure what type of loan you have, you can contact Fannie or Freddie directly to see if your loan qualifies.
- Fannie Mae. 1-800-2FANNIE (8am to 8pm EST) KnowYourOptions.com/loanlookup › …
- Freddie Mac. 1-800-FREDDIE (8am to 8pm EST) FreddieMac.com/mymortgage ›
Please note these rules only apply to government-backed mortgages. Private mortgages don’t have these required options and may demand payment in full after the forbearance period ends.
Do you have a car payment that you can’t make? A number of car loan companies and leasing companies have programs in place to delay or extend the term of your contract.
Check in at https://cars.usnews.com/cars-trucks/coronavirus-payment-relief to see if your lender is offering such a deal. Communication is always best in cases like this. Here’s an article about talking to creditors.
Many credit card companies are coming forward with forbearance programs as well. They may allow you to put off making a payment, make a smaller payment, reduce your interest rate or eliminate late fees. Some credit card issuers have also agreed to not report the late payments to credit bureaus. That means your credit score wouldn’t be impacted, at least not by this.
You can find out more information on these programs at https://www.foxbusiness.com/money/credit-card-forbearance-programs-bills
What happens next?
Now that you’ve got the next few months at least settled down, the question is, now what?
First – don’t depend on the government, but be prepared to get the money they’re offering. The new coronavirus economic stimulus and tax acts have created a whole new group of grants, loans, and tax breaks. We call these CoronaTax.
Congress has given us four CoronaTax bills. The first one dealt mainly with funding for important health agencies. The gold is in the next two bills.
From the book, CoronaTax: Free Money! New Opportunities!, the purpose of these next two bills is:
- Keeping you employed (if you currently have a job),
- Keeping your employees working (assuming you have a business)
- If you can’t work now (or your business can’t), getting you some income fast,
- Providing sick & paid leave for your employees, with the government’s help, and
- Giving businesses special tax breaks. (source)
Get your family stable financially. Then learn about what’s possible for the next step. Form a strategy and implement perspective.
We’ve got a new economy coming. Be prepared with knowledge, strategies, and action.
Diane Kennedy, CPA is the New York Times bestselling author of tax and business books. Her website, USTaxAid.com, is dedicated to deciphering complicated tax law laws and turning them into actionable tax strategies anyone can use to make and keep more money. Visit her Facebook group for all the updates and check out her new book, CoronaTax: Free Money! New Opportunities!
My husband has already had the bank return the $1200 to the IRS. The bank has been instructed to do the same for me when arrives. We are below the threshold for paying taxes. The big thing to remember is that the $1200 is a loan not a grant and it will have to be paid back with taxes due. I am lucky enough to be retired. All our money are federal funds. As long as the government still paying, then I will be okay. Yes I have some debt that needs paying off. But I probably owe less than the average American. I drive older paid off cars. I am building our house as we have money so no mortgage payment. Our land payment will be paid off this year not in 2040 as our loan paperwork says. I have two credit card payments that have charges from April. That will be paid off tomorrow. I have a full pantry and am trying to grow food. I have enough meat canned and frozen to last a year. Right now I have two tom turkeys that need butchering and two roosters. Let us say I have a lot of ducks that need to be culled too. I know we are bless compared to most. But I don’t go to movies or buy the latest fashion. Eating out is due to traveling. Everything is far away from home. Yesterday I drove 188 miles to a doctor appt, then 188 miles back. The VA will cover my travel mileage. My goal is to be out of debt completely by 1 Oct.
Mette, the $1200 is not a loan and is not taxable.
The last thing I’d do is give money to the government.
What you put forth is correct IF you qualify for the “rebate”, as it is termed. If you get this payment without qualifying for it, then the IRS can do whatever it wants to do. Do you trust “them” to be in your favor?
People who claimed their children on the non filers portal have not been getting the 500 per dependent.They were supposed to pay this at the same time as the 1200. The live help line is down and the automated line just refers you back to the IRS website. I can’t find any more info or help for this.
There are several things that might have happened.
#1: The dependents were age 17 or over, or will be in 2020.
#2: Someone else has claimed the dependents.
#3: The dependents filed their own tax returns and claimed themselves as well.
#4: The dependents didn’t have social security numbers on the form.
#5: The tax return that the IRS is using (quite possibly 2018 even though 2019 has been filed) didn’t have the dependents.
#6: The taxpayer hadn’t filed a tax return (non filer due to income threshold).
There are probably some more things that could have gone wrong, but those are the reasons I’ve run into so far.
If you give IRS your banking info on their website AND you owe back taxes to IRS, an overpayment to Social Security or owe the VA, or defaulted student loans, take your $ and close your account!
They have a long memory. Any $ in that account will be fair game for Uncle Sam to grab later.
They don’t need you to give them your banking information. Trust me, if they want money they’ll find your account just fine. You have to jump through hoops to GET the money though.
I’m having a fabulous run of luck amidst it all. My long time close woman friend is finally leaving her sourpuss husband and coming here. She paid off my sizeable (18 more years) mortgage balance and is buying us a very nice vehicle. Ya can’t beat that with a stick! 🙂
I have a 2 BR duplex with one messy boarder. Now I can slowly phase him out and finally keep the houses clean and not worry about the damaged unregistered car he buzzes in and out of the driveway with. We can then use that extra house as our stamp collecting palace and guest quarters, and get some rainbow people out here finally.
I won’t have to buy FEMA flood Insurance any more. What a ripoff–it was $1200/year here b/c I had a mortgage. Private, non-FEMA flood insurance is only about $350/yr for this place.
In other good news, the emergency $1200 was finally credited today after being mailed to the bank 12 calendar days ago. Slower even than the Bad Old Days when checks took ten days to clear. But it finally got there. So keep your fingers crossed folks.
in general, mail is very haphazard right now due to flight cancellations and other logistical problems caused by the widespread unlawful lockdowns. Some stamp collectors I have in Europe have not received their orders for up to 90 days now as piles of mail sit here and there in USA and around the globe. Normally it is 7-15 days.
I have made so little money for so long that the $1200 seems like a huge windfall even as it is next to nothing compared to those who have good jobs with huge salaries backed by Fed money printing and not much else since no one is making any real money to speak of.
Next, on to the $600 weekly bailout money which I have applied for. To me that is an absolutely huge amount of money. If I qualify, this will be the best year I’ve had in 33 years. And all for doing nothing other than applying. Ridiculous.
In 2013 I almost lost the house, but penciled my way into a loan mod. Now the house is paid off. So there is at least one Mom & Pop success story for you all.
It pays to pencil your way through life. Free money on top of what you work hard for.
Since you have to pay for everything twice, you have to make your money do double duty. Get what you are entitled to.
“The better prepared I am, the luckier I get.”