A second stimulus could be coming for millions of Americans.
The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 – a $900B relief package to deliver the second round of economic stimulus for individuals, families, and businesses was passed by the house and senate yesterday and is expected to be signed into law today.
The package will provide relief through multiple measures and will expand many of the provisions already put into place under the CARES Act, including a second round of direct stimulus payments to individuals and families.
When signed, here is what you can expect:
Stimulus Payments for Individuals and Joint Taxpayers
The bill includes a second wave of direct stimulus payments for millions of Americans – up to $600 for eligible individuals, $1,200 for joint taxpayers, and an additional $600 for each dependent child under 17. This means a family with two children may receive $2,400.
At this time, you don’t need to take any action to receive your stimulus payment. As long as you filed a 2018 or 2019 tax return or if you received one in the first round. Direct payments are expected to go out as soon as possible.
So, how do you know if you are eligible to receive a second stimulus payment?
If you have an adjusted gross income (AGI) of up to $75,000 ($150,000 married filing jointly), you should be eligible for the full amount of the recovery rebate.
*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 11 of your 2020 Form 1040.
As your AGI increases over $75,000 ($150,000 married filing jointly), the stimulus amount you get will go down. The stimulus check rebate completely phases out at $99,000 for single taxpayers, $136,500 for those filing as Head of Household and $198,000 for joint filers with no kids.
The bill also expands stimulus payments to mixed-status households (households with different immigration and citizenship statuses), meaning more households will be immediately eligible for this stimulus than were for the first round. This is retroactive, so some individuals that were ineligible for the first stimulus, provided under the CARES Act, could now be eligible to receive that payment as well.
*Note, if you think you may have been eligible for the first stimulus, but didn’t receive it, don’t worry. TurboTax will help you claim your stimulus payment in the form of a recovery rebate credit when you file your 2020 tax return.
Those people receiving Social Security retirement, disability, Railroad Retirement, VA, or SSI income and are not typically required to file a tax return, will again receive a stimulus payment. As in the first round, the IRS will use the information from your Form SSA-1099, Form RRB-1099, or the Veterans Administration to generate your stimulus payment.
Unemployment payments will be increased by $300 per week and the benefits will be extended until March 14, 2021.
The bill also extends the Pandemic Unemployment Assistance (PUA), which expanded unemployment to those who are not usually eligible for regular unemployment insurance benefits. This means that self-employed, freelancers and side giggers will continue to be eligible for unemployment benefits.
Certain workers who have at least $5,000 per year in self-employment income, but are disqualified from receiving Pandemic Unemployment Assistance because they also have an employer may be eligible for an additional $100 per week in unemployment benefits.
Special Lookback for Earned Income Tax Credit and the Child Tax Credit
This is a very important provision that will potentially help workers who experienced lower income in 2020 or received unemployment income in lieu of their regular wages, get bigger tax credits and larger refunds.
The special lookback rule allows lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020 since their lower 2020 income could reduce the amount of Earned Income Tax Credit and the refundable portion of the Child Tax Credit they are eligible for.
The Earned Income Tax Credit is the country’s largest program for working people with low to moderate income. More than 25 million eligible tax filers received federal Earned Income Tax Credit last tax season and the average Earned Income Tax Credit was $2,476 per filer.
Extended Student Loan Forbearance
College students and parents with federal student loans will receive an additional extension on student loan payments, and will not be required to make payments on Federal Student loans until April 1, 2021. This includes both principal and interest payments.
Expanded Paycheck Protection Program (PPP) for Small Businesses and Eligible Non-Profits
The Emergency Coronavirus Relief Act of 2020 provides a second round of payments under the Paycheck Protection Program.
Self-employed individuals, small businesses, small 501(c)(6) organizations, restaurants, live venues, and EIDL grants are eligible. Also, businesses experiencing severe revenue reductions will have the opportunity to apply for a second PPP loan.
Businesses with 300 or fewer employees that have experienced 30% revenue loss in any 2020 quarter and small 501(c )(6) organizations that have 150 employees or fewer will be eligible for a Paycheck Protection Program under the COVID-19 Emergency Relief Package.
The expanded Paycheck Protection Program also broadens the type of business expenses that can be forgiven under the loan to include supplier costs, allows business expenses paid utilizing PPP proceeds to be tax deductible and simplifies the loan forgiveness process.
Contractor Paid Leave
Contractors who were temporarily unable to work due to facility closures and other restrictions will be able to receive reimbursement for paid leave from federal agencies.
Eviction Moratorium and Rental Assistance
The bill extends the moratorium on evictions under the CARES Act, designed to protect renters from eviction, until January 31, 2021.
Families struggling to pay rent or with past due rent will be able to get assistance with paying past due rent, future rent payments, as well as utility bills.
The bill includes the permanent passage and, in some cases, multi-year extension of many additional tax provisions – commonly referred to as tax extenders. Tax Extenders provide tax relief and support for families and individuals through various mortgage relief, education and medical expense relief. Check back here for more details.
TurboTax Has You Covered
Don’t worry about knowing these tax provisions. TurboTax is here for you and will continue to keep you updated on coronavirus relief as details come out. Check back with the TurboTax Blog and our TurboTax Coronavirus Tax Center for the latest information.