CARES Act: Stimulus Checks and What They Mean for Your Goals

DEWITT, Mich. - Sept. 9, 2020 - PRLog -- The CARES Act is a comprehensive bill with several provisions designed to help provide financial support and assistance as we navigate through this challenging environment—including sending out stimulus checks to many Americans. Many are already receiving their payments and we want to help you figure out what this means for you. By prioritizing your needs, you can map out a plan that sets you up for success.

1. Address your immediate expenses

If you're struggling with current expenses, prioritize necessary expenses that you can't obtain assistance with from public or private programs. You may have additional options to reduce current expenses.

2. Add to your emergency fund and cash reserves for ongoing expenses

Emergency fund – We generally recommend you keep three to six months' worth of expenses in cash as an emergency fund.

Cash reserves – If you're retired, we recommend having 12 months' worth of income needs from your portfolio in cash and up to five years in short-term fixed income to provide for your ongoing living expenses.

3. Apply to other goals (including reducing debt)

If you have adequate emergency savings/cash and are financially stable, investing the money for retirement, education or other financial goals may be beneficial as the recent market decline could provide an opportunity.

4. Apply to charitable contributions

You could consider supporting a charity or organization as charities may be struggling at this time.

Delay in Tax Filing Requirements

The U.S. Treasury postponed the federal tax filing deadline from April 15, 2020, to July 15, 2020. IRA and charitable contributions can also be made up until July 15. When you file can have an impact on your anticipated stimulus check.

1. Are you expecting to receive a refund or owe taxes?

If you owe taxes and have more immediate expenses, this gives you additional time to pay.

2. Did you not file a 2018 tax return (and haven't yet filed a 2019 return)?

If you didn't file a 2018 tax return and don't receive Social Security benefits, you may want to file a 2018 or 2019 tax return as soon as possible to ensure you receive your payment.

3. Would your 2018 tax return result in a higher stimulus payment than your 2019 tax return?

It may be beneficial to wait until closer to the deadline to file your 2019 tax return. If you have not filed a 2019 tax return, the IRS will calculate the payment based on your 2018 tax return, which could impact the amount of your stimulus check.

Additional Considerations to Discuss with your Financial Advisor

There are many other provisions within the CARES Act that may help you depending on your specific situation.