Economic Relief Package Update

 In Success Stories, Tax Tips

12/23/20 – Monday night Congress passed an economic relief package that will provide a round of $600 stimulus payments to most Americans and partially restore the enhanced federal unemployment benefit, offering $300 for 11 weeks. The relief package also contains various other provisions. Tuesday night, President Trump threatened to reject the $2.3 trillion package, asking lawmakers to amend the measure to increase the stimulus payment from $600 to $2,000, and get rid of the “wasteful and unnecessary items.” If the current bill does go through, here is what we know: 

  • Individuals with an AGI on their 2019 tax returns of up to $75,000 a year (or $150,000 a year for a couple) would each receive a $600 payment. If they have dependent children, they would also receive $600 for each child. Individuals with income above these levels would receive partial payments that decline by $5 for every $100 in income.  
  • These payments could go out by the end of the year, and for many recipients would be direct-deposited.  
  • Lawmakers agreed to extend the time that individuals can collect unemployment benefits and also agreed to restart an extra federal benefit that is in addition to the state benefit. This relief package’s extra federal benefit would be $300 vs the $600/week and would go through March 14th.  
  • There is a change to the earned-income tax credit. For tax year 2020, you would be able to use the money you earned from 2019 for qualification purposes instead of 2020, for both the earned-income tax credit and the refundable portion of the child tax credit. The goal was to allow additional individuals to maintain their eligibility, who otherwise might have lost it because they lost their job or worked fewer hours this year.  
  • You could carry over unused health care or dependent care money and use it in 2021 for any flex spending account money. The same will be allowed for money left over in 2021 to be carried over to 2022. 
  • If you deferred making payroll tax payments the last few months, you do still have to make them up, but you can now do so over all of 2021. 

While President Trump did not officially say he would veto the legislation, he did suggest that he could.  Congress cannot amend the bill now that it has been passed, and it would have to consider new legislation. Only time will tell when or if the next relief package will go through.   

Tomorrow we will go through new updates with the PPP loan.  

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