by Daniel Kittell | Accounting News, COVID-19, News, Relief Bill, Stimulus, Stimulus Package
The American Rescue Plan Act of 2021 was signed into law by President Biden on March 11, 2021. Intended to facilitate the United States’ recovery from the devastating economic and health effects of the COVID-19 pandemic, this economic rescue legislation is one of the most expensive in U.S. history. Below is a broad overview of some of the larger components of the package.
Direct Financial Payments
Direct stimulus payments in the amount of $1,400 will be sent to individuals with an adjusted gross income (AGI) of $75,000 or less. This amount augments the $600 payments in the second stimulus package signed by former president Trump in December of 2020 in order to hit the $2,000 mark originally requested by Trump. Married couples with AGIs of $150,000 or less will receive $2,800 ($1,400 for each), and each qualified dependent regardless of age will receive $1,400. Payments are reduced for individuals who make over $75,000 and disappear completely for individuals who make $80,000 or more ($160,000 for married couples).
Extended Unemployment Benefits
Pandemic Unemployment Assistance (PUA) benefits of $300 a week are extended through September 6, 2021. These benefits were created for workers such as independent contractors, who do not typically qualify for unemployment insurance. The total number of eligibility weeks increases as well, from 50 to 79.
Federal Pandemic Unemployment Compensation (FPUC) benefits, which boost unemployment benefits by $300 per week, are also extended through September 6, 2021.
Pandemic Emergency Unemployment Compensation (PEUC), which provides added weeks of unemployment insurance benefits to workers who have depleted their state unemployment benefits, has been extended through September 6, 2021. The total number of eligibility weeks also increases from 24 to 53 weeks.
Additionally, the first $10,200 in 2020 benefits is tax free for families making $150,000 or less. Taxpayers who had taxes withheld from unemployment benefits in 2020 will be authorized to reclaim them when they file their 2020 taxes. If they’ve already filed taxes, they can file an amended tax return.
The Act also grants a 100% subsidy of COBRA health insurance premiums so unemployed and furloughed workers, as well as those who’ve had hours reduced, can continue their group health care plans through the end of September.
Expanded Child Tax Credit
For couples who make $150,00 or less in a year ($112,500 or less for single parents), the Act increases the Child Tax Credit maximum to $3,600 a year for each child under age 6, and $3,000 a year for each child ages 6 to 17. The law grants one year of credit payments, which will be sent by direct deposit on a monthly basis, possibly beginning this summer. The remaining amount can be claimed on 2021 tax returns.
Employer Tax Credits
The Act extends tax credits to employers who implement Families First Coronavirus Response Act (FFCRA) emergency paid sick leave or expanded family and medical leave to employees. In addition to previously acceptable FFCRA reasons for sick leave, from April 1, 2021 through September 30, 2021, credits are also available for sick leave wages paid when an “employee has been exposed to COVID-19 or the employee’s employer has requested such test or diagnosis, or the employee is obtaining immunization related to COVID-19 or recovering from injury, disability, illness, or condition related to such immunization.” Too, tax credits for emergency paid family leave are permissible for leave granted when an employee is incapable of working, either in person or remotely, due to the necessity of caring for a child whose school is closed at any point during the pandemic.
Help for Businesses
The “Restaurant Revitalization Fund” is a new program established under the American Rescue Plan Act that allocates $25 billion in pandemic assistance grants to eligible entities such as restaurants, bars, lounges, and caterers. The grants are able to administer up to $10 million per company with a limit of $5 million per physical location. The funds can be used to cover payroll, rent, utilities, and other expenses.
Two programs established under the CARES Act receive additional funding. The Economic Injury Disaster Loan (EIDL) program receives an added $15 billion, and the Paycheck Protection Program receives an added $7.25 billion. The PPP’s current application deadline of March 31, 2021, is not extended.
by Stephen Reed | COVID-19, News, Relief Bill, Stimulus, Stimulus Package
A group of centrist lawmakers recently revealed an economic relief bill totaling approximately $908 billion. The plan has gained some traction among both congressional Democrats and Senate Republicans, getting talks moving again after Democrats and Republicans have been unable to reach a compromise on a second relief package for months. Here’s a summary of what’s included in the proposal.
Business Aid
The largest chunk of the $908 billion bipartisan bill—$288 billion—is reserved for U.S. businesses, with a focus on primarily assisting small firms, most likely as another round of funding for the Paycheck Protection Program (PPP). This would allow businesses that have since depleted their PPP funding to apply for another round of payments. This time, however, businesses will most likely be required to prove considerable downturns in revenue in order to qualify for assistance. Part of the $288 billion would also likely include another round of Economic Injury Disaster Loans (EIDL), which provide smaller loan amounts than PPP.
Unemployment Aid
The next largest chunk of funding consists of $180 billion, which is dedicated to unemployment benefits for jobless Americans. The bipartisan plan proposes $300 per week to each American on unemployment on top of existing state unemployment benefits at least through March. This is half of the $600 per week that Congress approved in March (that expired in July), but in line with the $300 per week unemployment bonus that was approved in August (most of the funds allocated for that bonus expired in October). One question that has not been addressed is whether the unemployment benefits will be made retroactive to compensate for prior months without jobless benefits.
State and Local Funding
The relief bill offers $160 billion to state and local governments to assist them through the next several months without additional cuts to personnel or services. This has been one of the biggest sticking points in getting an additional relief bill passed as Congressional Republicans contest that that such aid is wasteful “bailouts”. As a condition for their support of the broader package, some Republican lawmakers are considering a compromise by looking to establish new boundaries on state and local funds.
Temporary Protection from Liability Lawsuits
The other big sticking point comes from Democratic opposition for the “liability shield” sought by the GOP. Senate Republicans have tried for months to give business entities immunity from coronavirus-related lawsuits. This bipartisan plan offers a temporary moratorium on COVID liability lawsuits, which would allow time for individual states to draft their own laws.
What’s Not Included?
The bipartisan plan markedly excludes a second round of $1,200 stimulus checks, a measure that has long been supported by congressional Democrats and President Trump. Congressional Republicans have been forthcoming on their resistance to spending more than $1 trillion on another stimulus package, and once unemployment assistance, aid to state and local governments, and small business relief is added up, it’s unfeasible to both include direct checks and keep the overall price-tag below $1 trillion. (Republican Senator Josh Hawley and Sen. Bernie Sanders have since teamed up to propose an amendment to this plan that would include direct stimulus checks to Americans.)
The plan also leaves out Republican-backed tax cuts, including Trump’s call for a payroll tax cut for firms, and Democrats’ push for bonuses to essential workers and health-care professionals. Also missing from the plan is a renewal of the federal moratorium on evictions that is set to expire at the end of the year.
by Pete McAllister | Accounting News, News, Tax, Tax Planning - Individual
As Congress begins working on a new coronavirus relief bill, the White House looks to target aid more specifically and cap the overall expense of the package at $1 trillion. Here’s what else we know about a second stimulus package.
Direct Stimulus Payment
Another round of stimulus checks could be coming to American households, but the amount is yet to be determined. While early talks of a second stimulus package were largely jobs focused, recent nationwide spikes of confirmed coronavirus cases have some states rolling back their reopening plans. The effect could be further layoffs for American workers and economic hardship for families, which increase the urgency for additional cash payments. However, the amounts and income thresholds could differ from the first round of stimulus checks, which were approved for individuals whose income was no greater than $75,000 and for married couples whose combined income was no greater than $150,000. Payments were phased out for incomes above those thresholds. It remains unclear at this point how Congress will move forward with this.
Changes to Unemployment Benefits
The CARES Act approved a weekly $600 bonus unemployment benefit to workers who’ve been laid off or furloughed as a result of COVID-19. This is in addition to state-provided unemployment benefits. However, this $600 weekly bonus is set to expire at the end of the month. Some lawmakers would like to see it extended while others would like unemployment benefits to be capped at no more than 100% of a worker’s compensation when employed. Though the additional unemployment benefit has proven to be a financial lifeline to workers who were suddenly laid off or furloughed, the risk is that it potentially incentivizes citizens to stay unemployed.
Back to Work Bonuses
Some lawmakers have put forth proposals for return-to-work bonuses. Such legislation could be an alternative to extending the enhanced unemployment bonus. So far talks of this bonus indicate a weekly $450 bonus for a limited time targeted at unemployed workers who return to work.
More Relief for Businesses
The CARES Act introduced the Paycheck Protection Program (PPP), which provided businesses that have been impacted by COVID-19 with forgivable loans. The second stimulus package could include an extension of the PPP, but some lawmakers would like to repurpose its unused funds for other kinds of assistance, which would be more clearly targeted at businesses that need the help. The White House also continues to advocate for tax breaks to promote new hires.
Liability Protection for Employers
The second stimulus package could see liability protections for employers who could possibly face lawsuits related to COVID-19, but any bill that permits sweeping immunity for employers will likely receive pushback from some lawmakers.
State and local aid, infrastructure spending, payroll tax cuts, and a tax credit for domestic travel are further probable points of discussion when Congress returns from recess.
