In an effort to combat COVID-19, President Donald Trump signed a $2 Trillion Coronavirus stimulus bill as a booster to the economy and a push through the global pandemic, for the United States of America. This Stimulus bill is considered to be the largest bill passed in the history of the United States. The objective of the stimulus bill is to provide monetary relief to every direct or indirect victim of COVID-19, of the country.
The bill is focused on direct stimulus payments, unprecedented expansion in unemployment benefits, small business loans, hospital loans, retirement rules, and a lot more. Enlisted below are some of the most common FAQs that the US citizens continue to ponder upon.
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What is in the $2 Trillion COVID-19 Stimulus Bill?
The stimulus bill entails;
- Direct stimulus payments – Adults eligible for $1200, married couples $2400 and $500 for each child below the age of 17. These are supposed to be direct payments for individuals making up to $75,000 annually
- Hospitals, health care providers and health care systems can use more than $130 billion for pandemic related medical expenses
- Expanded unemployment coverage that includes temporarily laid off employees, gig workers, freelancers, independent contractors, self-employed workers, etc. the bill states that the aforementioned are eligible for $600 per week for a period of four months, hereby
- A $367 billion grant and loan for small businesses
- Airlines to receive cash grants of $25 billion, $4 billion for air cargo carriers and $3 billion for airline contractors (example: caterers, etc.) for payroll back up
- Corporate America to receive $500 billion fund for loans, these loans will be supervised by an inspector general and a congressional panel. Documents for every loan will be made public
- $150 billion dollars granted to state and local governments
Direct Stimulus Payments (for tax payers)
How much of the payment am I eligible for?
Single adults are eligible for $1200, while couples would receive double that amount. Every child below the age of 17 is eligible for $500. However, this amount is only applicable for individuals with a gross income of $75,000. The amount will begin to decline as the gross income increases. For every $100 rise in gross income, there would be a $5 deduction from the bill payment. If your gross income exceeds $99,000, individually, you are not eligible for the payment. Couples with no children with a gross income of $150,000 are eligible for full payment as well. Couples with no children and a gross income of $198,000 and more, and couples with two children, surpassing an income of $218,000 annually are not eligible for this payment either. Whether adult or not, if you are claimed as a dependent by someone, you are not eligible for this money.
A valid social security number for every individual of a family is extremely important for this payment to be made. However, military members are exempt from this. Check your gross income on Line 8b of the 2018/2019 1040 federal tax return.
You could click here to calculate how much you’ll receive.
Will the payment be made in instalments?
No. You will receive a single payment with the full amount. However, bills added in the future can beget additional payments.
When will I receive the payment?
The estimated time is roughly 2 to 3 weeks. However, it totally depends on the time the Internal Revenue Service (IRS) takes to send out the cheques.
Do I have to file an application to receive this payment?
No. The Internal Revenue Service will make a direct deposit based on the recent income-tax figures it already has according to your 2018 or 2019 tax returns.
Does the bill apply to college students too?
If you are not claimed as a dependent, yes. Generally, students below the age of 24 are considered as dependents if their parents take care of half of their expenses at minimum.
Based of which year’s income will I get this payment?
This payment will be based on your 2019 income. However, if you have not filed for 2019 taxes yet, you could use your 2018 tax return document. For the same reason if you have the 2018 return, you can use your social security statement to avail the payment.
What if I have crossed the eligible income bar quite recently? Can I get the payment due to loss of 2020 income?
As of now, there is no provision for such a situation in the plan. However, you could reap similar benefits while filing for 2020 taxes. This bill payment is designed in a way to benefit from tax credit that is available for the entire year, in advance. Therefore your gross income is an important factor for this payment.
What if direct deposit information is no longer the same or I don’t have a direct deposit account?
The Internal Revenue Service mentioned on their website that there will be a provision of a portal where you can update this information. This portal will be made available in a few weeks.
If I have not filed for tax returns recently, would it affect my payment in any way?
There is a possibility. It is necessary that you file a simple tax return to receive an economic impact payment.This also applies to low-income taxpayers, veterans and individuals with disabilities. However, this would not mean that you owe any tax as you are filing tax returns now. This procedure is to be carried out only to make this payment relief simpler. The IRS stated that they would be updating their website with information on this soon. You can check for updated information here.
In case you owe tax money that you cannot pay, you can seek professional help or fill an application online to request an alternate payment plan.
What if my payment gets misdirected? How will I know?
Within a few weeks after your payment has been processed, you will receive mailed notice. If you cannot trace your payment after the notice, you can contact the IRS using the information on the notice itself.
Is this payment taxable?
If I receive disability payment or social security payments monthly, am I eligible for this payment?
Yes, you are eligible. Even if you are unemployed or a veteran you will be eligible for this payment relief.
What if I am a citizen of the U.S, but I live abroad? Am I eligible too?
As long as you meet the income requirements and have a social security number, you are eligible. If my income tax returns are being garnished due to student loans or some other valid purpose, would this payment be garnished too?
The bill has temporarily suspended all factors that garnish tax refunds. This also includes debts to the IRS. Therefore your payment relief will not be garnished.
Expanded Unemployment Cover
Who all does this expanded program cover?
This program has stretched itself way longer than the usual eligibility for unemployment benefits by including part time workers, self-employed individuals, gig workers, freelancers, contractors, etc. The bill also includes every individual that cannot work due to a direct or indirect effect of the novel coronavirus and individuals who are already receiving unemployment benefits.
According to the expanded unemployment plan, how much would I receive?
This amount would differ from state to state. An average worker in the U.S earns about $1,000 per week. The unemployment benefits generally make up for about 40% to 45% of this amount. The expansion would however pay an additional amount in an attempt to fill this gap. As per the expansion program workers will get an extra $600 per week devoid their state benefit.
Example: If Jennifer works in California and makes $1,100 a week, she would be eligible for the maximum state unemployment benefit of $504 per week. The expansion program would get her an additional $600 a week. Therefore, Jennifer would now make a total of $1,104 a week.
If I am a part-time worker and I lost my job due to COVID-19, am I eligible if my state does not cover part-time workers?
Yes. However, the amount and duration of the benefits will depend of your state itself.
What if I am a victim of the virus or have a family member I have to care for infected by COVID-19, are we covered?
If you have COVID-19 symptoms or are under diagnosis and you are unemployed or partly unemployed, you will be covered. Even if you cannot work due to COVID-19 infection, you will be covered. The same applies to an infected family member.
What other reasons stand valid for the payment under the expansion plan?
- If your child’s day care is shut due to the pandemic, and that is obstructing your work schedule
- If you are asked to self-quarantine and cannot get to work for the same reason
- If you were to start a new job but cannot due to the coronavirus outbreak
- If you have been laid off due to the coronavirus outbreak
- If your workplace is shut down due to COVID-19
- If the only earning member in your family has passed away due to COVID-19
For how long will I receive these payments?
The duration will depend on the state you reside in. while some states have cut back on weeks, some provide 26 weeks of benefits. There are states that scale the duration based on unemployment levels. The bill renders an additional 13 weeks for eligible workers. Therefore, the duration makes it 13 weeks plus the weeks your state grants you. However, the duration cannot exceed 39 weeks in any state.
For how long is the expansion plan valid?
The expanded unemployment plan is valid up till December 31 2020.
Who is not eligible for the expansion plan?
In case you have quit your job out of your own choice or due to the scare of the pandemic, you cannot benefit from the expansion plan. Fresher candidates unable to find a job cannot seek benefits of the expanded unemployment program. Individuals who are on paid sick or family leave are not eligible either. Also, employees who can work from home cannot benefit from this plan.
Student loan benefits
What relief does the bill grant for student loans?
The bill has suspended student loan payments until 30th September 2020. If you have loaned money from the federal government in the past decade, you are eligible for this benefit. However, money borrowed from Perkins loans, loans from state agencies, or loans from private lenders like Discover, Sallie Mae and Wells Fargo are not eligible for this waiver. The biggest plus is that you would not be charged interest over the loan during this suspension period. You can learn more about this waiver here
Retirement Plan Loans
What does the bill say about loaning out money from retirement plans?
The bill allows people to borrow up to $100,000 without facing a tax penalty, from tax-advantaged retirement funds. It declares a waiver on the required minimum distribution (RMD) rules for 401(k) plans and individual retirement accounts (IRAs). It also waives off the 10% penalty on early withdrawals up to $100,000. Only if you have been affected by the pandemic directly or indirectly, you are eligible to use this liberty. You will be expected to repay the borrowed amount within the coming three years.
If you or any of your family members run a small business, the stimulus bill entails benefits for you too.
How does the bill benefit Small Businesses?
The bill has allotted $349 billion to bolster small businesses as they strive to maintain overhead expenses and payrolls while being stricken by the unfortunate global pandemic. The main objective of this funding is to keep unemployment at bay and keep the worker income flow uninterrupted. For administration, training, consulting, and education related to these loan programs the bill has allocated $1 billion. This plan also aids those who have been laid off in a small business firm.
Who is eligible for this loan type?
Small Business Administration standard firm (often above the 500 employee mark) or organizations within the 500 employee mark like veteran organization, tribal businesses, non-profit organizations, etc. are eligible for a Small Business Interruption loan.
How much loan can I apply for?
You can apply for a loan up to 2.5 times the average monthly payroll, up to a maximum of $10 million. However the loan should be used to cover payroll, benefits, and salaries, as well as interest payments, rent, and utilities.
Do I need to keep something collateral to receive the loan?
No. the loan demands no personal guarantees and the bill has also waived off fees. Payments for the loan are postponed for 6 months to a year. No penalties will be imposed on prepayments for this loan.
What if I fail to repay this loan within stipulated time?
The bills intends to forgive the principal of this loan up to the total cost of payroll, mortgage interest payments, rent, utility payments, and any extra wages given to tipped employees made during the eight-week period after origination. However, if there is a reduction in the average number of employees during this period, the principal amount could be reduced too.
Employer payroll taxes will be postponed for 2020. The tax payments can be done in 2 halves- 50 percent in 2021 and 50 percent in 2022. Excise tax on alcohol used to produce hand sanitizer will be suspended for this year altogether. Businesses suffering losses this year can be carried back for about 5 years.
Although the coronavirus stimulus bill can do little about what the pandemic robs off us, it sure aims at providing some monetary relief to everyone in need.
As the bill is constructed to address the immediate needs of families and individuals, there is still a lot more that the economy will require for getting back to a time like before the occurrence of the pandemic. However, springing back the old times and stepping out of the lock down would definitely call for a far off trip and a meeting with Mother Nature.
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