On December 27, 2020, President Trump approved a much-anticipated $900 billion COVID-19 stimulus package that extends certain relief measures established by the March 2020 CARES Act which were set to expire at the end of this month. The stimulus package bill simultaneously adds funding for a few additional items, not originally addressed in the earlier stimulus package. Funding for new items is designed to help both individuals and businesses most dramatically impacted by the pandemic.
Here is a brief summary of what’s included in the new COVID-19 stimulus package.
The new COVID-19 stimulus package provides an additional one-time benefit of $600 in Federal aid for individuals, $1200 for married couples filing jointly, and an additional benefit of $600 per dependent child under the age of 17. Benefits will phase out for individuals with adjusted gross incomes (AGIs) of more than $75,000, married couples filing jointly with an AGI of $150,000, and those claiming themselves as head-of-household with AGI in excess of $112,500. Stimulus payments are not considered as part of a taxpayer’s taxable income and do not need to be repaid at any time but are looked upon as an advance against credits taxpayers can take on their 2020 returns. If the advance stimulus payment is greater than the actual credit a taxpayer is normally allowed to take, the taxpayer is not required to make a payment back to the IRS to make up the difference. According to U.S. Treasury Secretary Steven Mnuchin, the bottleneck experienced during the first stimulus check wave is not expected to be repeated now that the logistics have been refined. Stimulus checks will begin mailing in the coming days.
Benefits for the Jobless
In addition to their stimulus checks, those Americans who have lost their jobs due to the pandemic will also be eligible to receive a weekly check of $300 for the 11-week period that runs from the end of December to mid-March 2021. These benefits cover self-employed, temporary, gig economy workers, freelancers, and other independent contractors, under the already-existing Pandemic Unemployment Assistance program. Those who are self-employed and have earned a minimum of $5,000 for the year but who find themselves ineligible for the Pandemic Unemployment Assistance program, can receive an additional $100 check each week to cover their expenses. Former employees will also stand to benefit from the extension of the Pandemic Emergency Unemployment Compensation program which offers 13 additional weeks of unemployment payments once a former employee’s standard benefits are exhausted.
Small Business Loans and the Paycheck Protection Program
The Paycheck Protection Program (PPP) was created to keep small businesses affected by the pandemic afloat by allowing them to apply for Federal aid. As the PPP received such overwhelming response, a second round of applications had to be opened for acceptance during the summer but application acceptance was halted in August 2020. The new COVID-19 stimulus package infuses the PPP with $35 billion in new funding, earmarked exclusively for small business grants for those businesses which never previously borrowed. Those businesses which have already received PPP loans would, under the new stimulus package deal, be able to deduct any expenses affiliated with their loans – essentially permitting a business owner to benefit from both a tax deduction and tax-free loan forgiveness. Additionally, the new stimulus package creates a second round of PPP loans for those businesses which borrowed and fully utilized the original PPP loan proceeds.
Renting and Evictions
The current eviction protections will now be extended through at least January 31, 2021 (though this may be revised again in the months to come). This provides renters the security of knowing they cannot be evicted from their rental property in the immediate future. The new COVID-19 stimulus package adds $25 billion in emergency assistance funding to those renters who have lost their income stream as a result of the pandemic and are subsequently unable to pay their full rental fee.
Education and Child Care
Educational institutions geared towards kindergarteners through college-aged students, are eligible to take advantage of an $82 billion boost, now available through the new stimulus bill. Childcare providers also stand to benefit from a $10 billion additional provision for those who operate in the field and whose livelihoods have been affected by the pandemic.
Supplemental Food Programs
Both the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp program) and the Pandemic-EBT program have also been given a lifeline through the new bill. The goal of these programs is to help feed those in need. The new stimulus bill will add $13 billion in funds for SNAP and child nutrition. The stimulus package also provides $400 million for food banks and $175 million for nutrition services for senior citizens.
It is important to note that the new COVID-19 stimulus package covers items and makes funds available at the Federal level, only. No direct aid for state or local governments has been included in the bill.
For questions on the new COVID-19 stimulus package and how it may be beneficial to you, please contact your Untracht Early advisor for more information.