Saturday, April 4, 2020

Will You Get Personal Cash April 6?

As part of the recent "stimulus" legislation, individuals are supposed to receive cash grants up to certain income levels based on past tax filings. According to the Legislative Analyst's Office (LAO) , many folks are supposed to receive this money directly in their bank accounts by Monday. We'll see.

Broad-Based Cash Assistance in COVID-19 Recovery Actions 
(from Legislative Analyst's Office)

On Friday, March 27, the President signed H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal relief act aimed at mitigating the economic and public health consequences of the coronavirus disease 2019 (COVID-19). The CARES Act includes direct cash assistance for most Americans. In this post, we describe that cash assistance and put it in the broader context of existing income support programs and the economic challenges presented by the current public health crisis. (Everything in this post reflects our best understanding at the time of publication. We will continue to review and may update this post as more information becomes available.)

Public Health Response to COVID-19 Limits Many Californians’ Income. Although the full economic consequences of the current COVID-19 public health crisis will not be known for some time, many Californians already have experienced reduced income. For some Californians, reduced income has resulted from reduced hours or temporary business closures and their incomes are expected to increase soon after current public health measures are eased. For others, reduced income has followed layoffs or other effects expected to be longer-lasting.

State, Federal Government Operate Several Long-Standing Cash Assistance Programs for Targeted Populations. For example, one large, long-standing cash assistance program is the California Work Opportunity and Responsibility to Kids (CalWORKs) program, which supported more than 350,000 low-income families in 2019. Participating families receive cash assistance that varies based on household size, income level, and region. Cash assistance is also provided through the Supplemental Security Income/State Supplementary Payment (SSI/SSP) program, which provides cash assistance to low-income aged, blind, and disabled individuals. Another related program is the federal Earned Income Tax Credit (EITC), or its state-funded equivalent CalEITC, which provides refundable tax credits to low-income workers.

State and Federal Government Also Ensure Some Wage Replacement in Specific Situations. One example of a wage replacement program is unemployment insurance (UI), which provides time-limited cash assistance to recently unemployed workers. Other examples include paid family leave and disability insurance. (See our recent post for more information on how COVID-19 relief actions have affected UI.)

Existing Income Support and Wage Replacement Programs Have Limited Reach. Although caseloads in many cash assistance programs tend to grow as overall economic conditions decline (for example, CalWORKs served approximately 70 percent more households during the Great Recession than it does today), none is designed to have a universal reach. For example, individuals without children are not eligible for CalWORKs, whereas those who are still employed can only receive UI under certain conditions.

Federal Government Issued One-Time, Broad-Based Cash Assistance in Last Two Recessions. In 2001, the federal government issued about 90 million checks nationwide, totaling as much as $300 per single adults ($600 for married couples). Then again in 2008, the federal government issued about 125 million checks nationwide totaling between $300 and $600 for single adults ($600 to $1,200 for married couples) and an additional $300 per child. (In both cases, the size of the rebate depended on recipients’ income.) In both cases, these direct cash payments were intended in large part to alleviate the economic stress many households experienced during then current economic downturns.

Recent Federal Legislation Includes Broad-Based, One-Time Cash Assistance. Under the CARES Act, adults earning less than $75,000 in their most recent tax filing (2019 for those who have already filed, 2018 otherwise) are generally eligible for a one-time cash payment of $1,200, and $500 for each child. As Figure 1 shows, these payments are phased out starting at $75,000 of income for single adults with no children ($112,500 for single adults with children, and $150,000 for married couples), such that a single adult is no longer eligible for assistance if they earn $99,000 or more. The administration has publicly set a goal to start processing these payments by April 6.

Some Low-Income Californians Are Not Eligible for Direct Cash Assistance. Although the direct cash assistance in the CARES Act is far more broad-based than in other cash assistance programs, it is still limited in two important ways. First, only Californians who have already filed federal tax returns for 2018 or 2019 will receive cash assistance. (Some individuals who do not file taxes will still receive assistance, for example some older adults living primarily off of Social Security benefits.) Millions of Californians do not earn enough income to require them to file tax returns.

Though some of these Californians nevertheless file taxes (in many cases to qualify for federal tax credits), an unknown number do not. (The federal deadline to file 2019 tax returns was recently extended to July 15, and anyone filing by that date would appear to be eligible for the assistance.) Second, about 800,000 California residents file taxes using an Individual Tax Identification Number (ITIN) rather than a Social Security Number due to their immigration status. The CARES Act renders ITIN filers ineligible for cash assistance.

Would Not Affect Eligibility for Large Means-Tested Programs. Although income typically affects individuals’ eligibility for many social service programs, it is our understanding that the direct payments authorized by the CARES Act will not affect eligibility for the largest of these programs. In particular, subsidized health coverage provided by Medi-Cal, food assistance provided through CalFresh, and cash assistance provided by CalWORKS do not include nonrecurring lump sum payments such as these when calculating household income for purposes of program eligibility.

Expected to Provide Roughly $25 Billion to Californians. Using tax data from 2017 (the latest available, although not perfectly representative of 2018 and 2019 returns), we roughly estimate about 14 million California households (or about 85 percent of all tax filers) will be eligible to receive a total of about $25 billion to $30 billion in direct cash assistance from the CARES Act. This assumes all those who qualify—based on 2017 federal returns—would receive the benefit. Although this is our best estimate, we acknowledge that there is uncertainty in the number of individuals who will ultimately receive the CARES Act benefit for two primary reasons. First, the number of eligible federal tax filers in 2018 and 2019 may be more (or less) than the number who filed in 2017. Second, low-income individuals who were not required to file a federal return for 2018 could now file for 2019 in order to receive the benefit. To maximize the benefit to Californians, the state may wish to consider efforts (such as outreach) to increase the number of low-income individuals filing federal tax returns in order to qualify them for the benefit.

Effect on California Economy Is Uncertain. Part of the motivation for sending one-time cash assistance to households is the expectation that these households will spend the cash in a way that creates new economic activity. Research on checks sent out in 2001 and 2008 provides some support for the expectation that this cash assistance will boost the state and national economies. That being said, several unique aspects of the COVID-19 outbreak—such as the wide-spread closure of businesses, cancellation of major events, and restricted mobility of much of the population—raise serious questions about the applicability of past research to the current situation. For this reason, while the cash assistance provided by the CARES Act likely will create some new economic activity, the ultimate magnitude is highly uncertain.


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Waiting for stimulus check or unemployment benefits? Here’s when they might arrive

David Lightman, April 3, 2020, Sacramento Bee

Another two weeks and that cash payment of $1,200 or more should be in most people’s bank accounts. But if you are getting a paper check, or just lost your job, it could take a lot longer to see at least some of your benefits. Washington and Sacramento officials say they’re working furiously to get economic aid to the people who need it most, which nowadays is just about everyone. But not all money is going to come everyone’s way at the same time.

There’s no easy way to learn what’s coming when. Whether online or on the phone, response lines are jammed. Websites are not updated quickly. One suggestion: Contact your local congressional office. But be warned: They’re swamped too. In the past two weeks alone, for instance, the office of Rep. Jim Costa, D-Fresno, has received 995 emails and 104 phone calls related just to COVID-19. Of those 155 have turned into cases; in normal weeks, the office opens 15 cases per week on different issues.

So the watchword among the experts is simple: “Be patient,” advised Nicole Kaeding, economist at the nonpartisan National Taxpayers Union Foundation. Here’s an estimated timeline compiled from government agencies, Sen. Dianne Feinstein’s office and taxpayer and interest groups, subject to constant change:


The first day small businesses can apply for “Paycheck Protection Program” forgivable loans to help largely with payroll. Businesses generally must have fewer than 500 employees. Some of the money can be used to pay rent, mortgages and utilities. Nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors are also eligible, though not all can apply Friday (see below).

A total of $350 billion is available, and the National Federation of Independent Business is encouraging applicants to see their lender as soon as possible since there is a funds limit. There’s been criticism from banks and businesses that the government has not prepared lenders properly for the onslaught, so it could be awhile before you can get through.


That’s the latest estimate as to when the $600 a week federal unemployment benefit could be available to California workers, according to the state California Economic Development Department, which manages the program. The department said it is working on the programming needed to implement the federal program.

And, it said, “that programming can’t be finalized until states receive the details and final guidance from the U.S. Department of Labor. Barring any big surprises in that guidance when it arrives, it is EDD’s hope that the extra benefit payments can begin next week and continue thereafter as bi-weekly payments come due for unemployed Californians.”

Before the coronavirus outbreak triggered an unprecedented number of applications, about 80% of first time claimants got their checks within three weeks. The agency has been increasing staffing and working extra hours and is still aiming for that timeline. California now provides a maximum of $450 of state benefits per week to claimants, and the federal government will provide another $600 weekly until the end of July. It’s unclear whether the sums will be in one check or sent separately.


Treasury Secretary Steve Mnuchin said Thursday cash payments would be begin “within two weeks,” and The Washington Post reported they could as soon as late next week.

“I told you it would be three weeks, I’m now committing to two weeks,” Mnuchin said.

An estimated 60% of filers should see the extra funds distributed this way. Eligible for the full $1,200 per adult amount are individuals with incomes of $75,000 or less and joint filers earning $150,000 or less, plus $500 per child. The amounts are then phased out for higher incomes, and is unavailable entirely for individuals who earned $99,000 and couples who made $198,000. The incomes are taken from 2018 tax returns unless you’ve already filed a 2019 return.


The first day independent contractors and self-employed people can apply for the Paycheck Protection Program Loans.


State and local governments are due to get a total of $150 billion to help fight the coronavirus outbreak. Allocations are made largely on population. California is due to receive $15.3 billion, and up to 45% of that money can go to governments of cities with more than 500,000 people. That is expected to include Los Angeles, San Diego, San Jose, San Francisco, Fresno and Sacramento. The money should be released April 24, according to Erlinda Doherty, director of the budgets & revenue committee at the National Conference of State Legislatures.


Anticipated starting date for issuing for paper checks for the lowest income consumers, probably those making $10,000 or less. The Washington Post reported that paper checks would then be sent out depending on income, with those earning less than $20,000 due payments May 1. Each week, the income level would grow $10,000, a process that could take the entire summer. There could be another alternative, though.

“In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail,” according to the House Ways and Means Committee Republican staff.


Homeowners with Federal Housing Administration-insured mortgages can qualify to defer or lower payments for up to a year if they are unable to pay full amounts because of the coronavirus outbreak. 

If you think you qualify, contact whoever handles your mortgage, the Department of Housing and Urban Development advises. And, the agency says,”you can use any available means of communication to contact your servicer to request a forbearance. This includes, but is not limited to, phone calls, emails, texts, fax, mail, teleconferencing, etc.” Homeowners are also advised to contact a HUD-approved housing counseling office...

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