On December 27th, after an unexpected delay, President Trump signed the most recent piece of COVID-19 aid into law. The aid package was just one part of a larger funding bill, and it contained many provisions, most notably an additional round of direct payments to Americans. Many have already received it as of January 4th. While the President initially asked that one-time payments increase to $2,000, the bill ultimately passed without changes to the initial proposal of $600.
Here are some of the frequently asked questions related to this additional round of stimulus:
Who will receive the payments?
Single: $600 + $600 per qualifying child. Phaseout begins when gross income is over $75,000 and is fully phased out at $87,000.
Married: $1,200 + $600 per qualifying child. Phaseout begins when gross income is over $150,000 and is fully phased out at $174,000.
Head of Household: $600 + $600 per qualifying child. Phaseout begins when gross income is over $112,500 and is fully phased out at $124,500.
Is there more coming?
While the Democrat-controlled House of Representatives quickly passed the increase to $2,000, the GOP-controlled Senate adjourned for 2020 without bringing it to a vote. After the Georgia runoffs, the Senate will be under Democratic control, so it’s likely a bill that includes increased stimulus dollars will be brought to the table.
Will it be taxable?
No, the stimulus payment will not be considered income.
What if I am eligible this year but my income exceeded the threshold from last year?
Like the direct payment earlier this year, the payment will formally be based on 2020 income. Since filing 2020 income taxes hasn’t happened yet, the IRS will use 2019 income tax returns to make the initial determination of who will receive the direct payment. If you did not receive the direct payment due to 2019 income but will be eligible once you file your 2020 return, you will be able to claim the direct payment as a tax credit on your 2020 income tax return.
Will I have to pay back the stimulus if my income exceeds the limits in 2020, but didn’t in 2019 or 2018?
No, taxpayers who’s incomes increase in 2020 into or over the phase-out range will not be required to pay back the stimulus payment.
More information is available on the IRS website here.
Other notable provisions of the bill include:
- $300 per week federal unemployment boost through mid-March
- More funding for Paycheck Protection Program (PPP) loans
- Direct aid to highly-impacted businesses, including airlines, mass transit agencies, Amtrak, and farmers
- Dollars to support COVID-19 vaccine distribution, as well as testing, tracing, and mitigation programs
- Termination of medical surprise billing by requiring medical providers to issue true and honest cost estimates three days before any scheduled procedure
- Extension of federal prohibition on evictions through January 2021, including rental assistance to tenants in lower-income areas
- Dollars to expand broadband internet to get more people connected
- Deductability of meals as a business expense
If you have any questions about how this bill could impact your financial plan, please contact us.