Between trying to find toilet paper, figuring out how to be a math, science and art teacher (who knew that Google Classroom existed?), and working from home full-time, it’s understandable if you haven’t totally kept on top of how the coronavirus will impact your finances.
So, we thought we’d get you caught up. Whether it’s some general tips for weathering financial uncertainty or action the government has taken to support the economy, here are some of the key takeaways when it comes to the coronavirus and your money.
- YOU DON’T HAVE TO PAY YOUR TAXES IN APRIL
To be clear, you will have to pay your taxes. But the federal government has extended the April 15th deadline for filing your federal taxes until July 15th. If you’re expecting a refund this year, it’s probably a good idea to just go ahead and file now so you can get your money. But if you owe taxes and you’d like to wait to file, the government is cool with that — at least until July 15th. Here’s what you should know about the tax deadline extension.
- YOU MIGHT HAVE MONEY COMING YOUR WAY
The big headline from the record $2 trillion economic stimulus package passed in late March was that checks (well, mostly direct deposits) would be sent to most of us. Basically, these payments start at $1,200 for every adult and $500 for each dependent child who is 16 or younger — but they are reduced if the adjusted gross income in your most recent tax filing (for tax year 2019, or 2018 if you haven’t filed yet this year) is over a certain threshold.
The payments are just one part of the huge stimulus package, which also includes expanded unemployment insurance and forgivable loans for small businesses that continue paying employees.
- YOU HAVE OPTIONS IF MONEY IS TIGHT
If the stimulus check isn’t going to be enough to make ends meet, there are a number of things you can do. First, check out these ways to cut costs from your budget quickly. Then, if you still need extra money, you have several options:
A line of credit. If you have an open home equity line of credit or some other line of credit, you could tap into this loan to access money. Credit cards are an option here, but if you go this route, it may be beneficial to look for a card with a 0 percent promotional APR offer and make sure that you meet the minimum payment requirements to keep the promotional rate.
Permanent life insurance. If you have a permanent life insurance policy that has accumulated cash value, you could take a loan against your policy (either through borrowing from your insurance company or using your policy as collateral for a bank loan).
Your retirement account. Part of the stimulus package the government passed allows you to more easily tap your retirement savings for cash right now. The package waives the usual 10 percent penalty for early withdrawals from IRAs and qualified plans for people impacted by COVID-19. Distributions will still be included in gross income and subject to regular income tax, but you can spread the amount of tax you will owe over a three-year period. Distributions also may be re-contributed within three years of withdrawal.
There are pros and cons to each of these options. If you are considering these, your financial advisor can help you determine what may be the best option for your situation.
- THE SCAMMERS HAVE SWARMED IN
Amid the heartwarming stories of neighbors helping each other out during a crisis there will always be a few bad apples. Scammers are phishing, meaning they’re sending emails that look real but are designed to get you to click on a link that will install malicious software on your computer. Read more about the scams that have already popped up here; then make sure you keep an eye out for suspicious emails.
- THERE’S A LIGHT AT THE END OF THE TUNNEL
While much seems uncertain and maybe even a little scary right now, this kind of economic uncertainty isn’t new. In 2008, the future of our financial system was in question. In 2001, terrorism was a huge unknown. We got through uncertainty in the past. We have every reason to believe we will get through this time and come out stronger. Through 160 years, Northwestern Mutual has stood strong through wars, the Great Depression and even a pandemic flu. In this recent perspective, Northwestern Mutual Chairman, President and CEO John Schlifske says he couldn’t be any more confident about the future for Northwestern Mutual and the country as a whole.