The Consolidated Appropriations Act, 2021, provides $900 billion of pandemic-related assistance to individuals and businesses, including the second round of direct stimulus payments.
This Act included, among other things, a provision for a second stimulus payment, increased unemployment benefits, and special temporary rules for the Earned Income Tax Credit or Child Tax Credit.
1. The Second Stimulus Payment:
Who is eligible to receive a Second Covid-19 Stimulus Payment? Payments begin phasing out once adjusted gross income exceeds $75,000 for a single taxpayer and $150,000 for a married couple. As was the case with the first round of payments, this second payment represents an advance on a tax credit that will be reconciled on the 2020 tax filing. Therefore, for the tax year 2019, you must have earned less than $75,000 as a single taxpayer or $150,000 as a married couple.
If I am eligible what can I expect to receive: Eligible individuals can expect to receive payments of $600 for individuals, $1200 for a married couple filing jointly plus an additional $600 per child under the age of 17. This is based upon your 2019 tax filing. Therefore, if you claimed a child under the age of 17 on your 2019 tax return, you will receive the relief payment for that child. Only one parent will be eligible to receive the payment.
Keep in mind that if you owe back child support, the Treasury Department will direct those funds to the custodial parent to help make up what is owed.
Those who filed their 2019 tax returns will receive their money automatically, as well as Social Security recipients and those who uploaded their bank account information using the IRS’s online portal to receive their first payments.
The receipt of Federal stimulus payments is not considered taxable income.
Undocumented immigrants who don’t have Social Security numbers remain ineligible for the payments. But in a change from the first round, their spouses and children are now eligible as long as they have Social Security numbers.
Second stimulus payments had a cutoff date of January 15, 2021; If you were eligible for the second stimulus check but did not receive it, you will have to claim this money when filing your taxes next year.
2. Unemployment benefits:
If you are receiving unemployment benefits, you will receive a $300 weekly federal enhancement in benefits through March 14. The amount is half of the earlier federal boost, which ran out at the end of July. As a result of the timing of this legislation going into effect, you may only be eligible for 10 weeks of augmented payments, instead of 11 weeks. For existing claimants who have not yet reached the maximum number of weeks, the measure provides a federally funded $100 per week additional benefit to those who have at least $5,000 in annual self-employment income but are disqualified from receiving Pandemic Unemployment Assistance because they are eligible for regular state unemployment benefits.
Keep in mind that your unemployment benefits are considered as taxable income.
3. Earned Income Tax Credit or Child Tax Credit:
A special temporary rule allows taxpayers taking the Earned Income Tax Credit or the Child Tax Credit the ability to use the income from their 2019 tax year to determine a 2020 credit.
Just as we learn to navigate the details of this second Stimulus Package, a third proposed $1.9 trillion stimulus package could be rolled out, offering a third stimulus check in the amount of $1400 per eligible adult and a $400 weekly unemployment bonus. Of course, if and when that occurs, we will provide you helpful information.
As always, if you have questions or concerns relating to this topic, or other topics concerning your family’s current situation, feel free to reach out to us for legal assistance.