What Does the Second Coronavirus Stimulus Relief Package Mean for Me?

What is the Second Coronavirus Stimulus Relief Bill?

What is the Coronavirus Stimulus Relief Package?

The $900 billion Second Coronavirus stimulus relief bill provides more economic stimulus for both individuals and businesses. The bill was signed into law on December 27th, 2020. What this means is additional measures have been added and existing measures under the CARES Act have been expanded.

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021, better known as the second coronavirus relief package means millions of Americans can look forward to another injection of stimulus as 2021 begins.

For taxpayers, this means every individual taxpayer in the country is eligible to receive a $600 stimulus check. So what does this mean for you?

Second Round of Stimulus Checks for Individual and Joint Taxpayers

Individuals are now eligible for a $600 no strings attached stimulus check from the Federal government. Joint taxpayers will receive $1,200. What has often been forgotten in the media is every dependent child will qualify taxpayers for an additional $600. Children must be under the age of 17 to qualify as a dependent child.

The standard family of four will, therefore, receive $2,400 from the Federal government. You do not need to do anything to receive this check.

The IRS will be responsible for issuing these stimulus payments using the latest available information on taxpayers. For most Americans, this will be their 2019 tax returns. Stimulus payments will be awarded via check or direct deposit.

The IRS is releasing regular updates on the status of second stimulus checks. They said the first direct deposit payments were sent on December 29th, 2020. These will continue for the next couple of weeks. Physical checks will be mailed starting December 30th, 2020.

Are You Eligible to Receive the Second Stimulus Payment?

Do you have an adjusted gross income of up to $75,000, or $150,000 if married filing jointly, then you are likely eligible to receive the full stimulus payment.

Take note, your adjusted gross income includes wages, salaries, and interest payments. It also includes deductions for IRAs and student loan interest. To find out your 2019 adjusted gross income, look up line 8b on Form 1040.

If your adjusted gross income was more than these stated figures, your stimulus entitlement will be less. For single filers with an adjusted gross income of more than $87,000 or joint filters with an adjusted gross income of more than $174,000 with no dependents, the stimulus check will completely phase out.

Additionally, the coronavirus relief package has expanded stimulus payments to mixed-status households. A mixed-status household is a household with different immigration/citizenship statuses. More households will be, therefore, eligible for the second relief check than the first one.

The expansion of these provisions means many mixed-status households that were ineligible for the first payment may actually be able to claim that first payment now, alongside the second one. If you are now eligible for the first relief check, you will be able to claim this through your 2020 tax return.

However, you may be someone receiving disability, Social Security, railroad retirement, VA or SSI income. These groups are not required to file a Federal tax return, in the majority of cases. These groups will still receive their stimulus checks.

The IRS will utilize the information they have on file through Form RRB-1099, SSA-1099, or through the Veterans Administration.

Extended Unemployment Payments

One of the big worries Americans had was that if they were unemployed, they would no longer receive any assistance payments. The new coronavirus relief bill has increased unemployment payments by $300 per week. These benefits have been extended until March 14th, 2021.

Furthermore, the bill has maintained Pandemic Unemployment Assistance (PUA). PUA enables Americans who would ordinarily not be eligible for standard unemployment benefits to now be able to claim unemployment. This means millions of self-employed and people who carry out freelance work will be eligible for unemployment benefits throughout the pandemic.

For workers who earn at least $5,000 per year through self-employment income and have found themselves disqualified from PUA payments due to also being an employee they will now be able to claim an extra $100 per week in unemployment pay.

Special Rules for the Child Tax and Earned Income Tax Credits

A particularly important provision in this bill pertains to the Earned Income and Child Tax Credits. For workers who saw their income drop during 2020, or are currently living on unemployment benefits, it will be possible to claim a larger tax credit and a larger tax refund in the 2021 tax season.

The bill implemented a special lookback rule designed to provide relief for Americans on lower incomes. They will be able to use their earned income from their 2019 tax return to determine whether they are eligible for the Child Tax and Earned Income Tax Credits.

This will come as a great relief to millions of Americans because their lower incomes in 2020 could reduce the amount of tax credit they can claim. More than 25 million taxpayers claimed the Earned Income Tax Credit last year, with the average credit worth $2,476.

Small Business or Non-Profit? Get a Second Round of Payments Through PPP

The Expanded Paycheck Protection Program (PPP) is a relief scheme aimed at small businesses and certain eligible non-profit organizations.

Like the first coronavirus relief bill, eligible self-employed Americans, small businesses, 501(c )(6) organizations, restaurants, and live entertainment businesses will, again, be able to apply for a PPP loan.

If your business has 300 employees or less and has seen a 25% decrease in revenue in any of the four business quarters of 2020, you will be able to apply. Small 501(c )(6) organizations with 150 employees or less are also eligible for a PPP loan.

The difference in PPP loans this time is the definition of business expenses that can be declared as ‘forgiven’ under the terms of the loan has been expanded. This time supplier costs are included, which is a huge benefit to eligible businesses. That means all business expenses paid for with PPP loans will be tax deductible.

The coronavirus stimulus package has provisions for contractors who were unable to work due to the temporary closure of their facilities. They may be able to receive paid leave reimbursement through the Federal government.

Moratorium on Evictions and Rent Payment Assistance

For Americans who are living in rented accommodation, the Federal moratorium on evictions, defined under the CARES Act, has been extended until January 31st, 2021.

It also offers assistance for families struggling to pay the rent and families with rent payments still due. They could be eligible to get Federal assistance for covering back rent and future rent payments. Utility bill assistance has also been included.

Tax Extenders

Known as tax extenders, the second coronavirus relief package includes the permanent inclusion, or a multi-year extension, of many tax provisions. Tax extenders offer tax relief and additional support for families and individuals.

There are many types of tax extenders for low-income Americans, including education, mortgage, and medical expense relief.

Work Out What You are Eligible for With TurboTax

TurboTax Online Stimulus Relief Bill Updates

The impact of the second coronavirus relief bill on taxes for the 2021 tax season is profound. However, you can use TurboTax to help you work out what you are eligible for. They have a variety of professionals, as well as a comprehensive knowledge base available, who can answer any questions you might have.

How to File Taxes Online in 3 Simple Steps With TurboTax

Remember, with TurboTax Online Tax Filing we’ll ask you simple questions and fill out the right forms for you. We’ll find every tax deduction and credit you qualify for to get you the biggest tax refund, guaranteed!