Now that the $900 billion stimulus package has been signed into law, individuals and businesses affected by COVID-19 will receive some additional relief. How might you be helped?
Here are the key provisions of the new legislation, along with how they could affect you:
• Stimulus payments to taxpayers – If you had an adjusted gross income of up to $75,000 ($150,000 for joint filers and $112,500 for heads of household), you’re eligible for a $600 payment, or $1,200 if you filed jointly, as well as $600 per child younger than 17. The payment amount is gradually phased out above certain income thresholds. By now, you may have already received your payment, especially if you had established direct deposit with the IRS. If you don’t need the money to pay your bills, you could use it to help build an emergency fund or add to your IRA or other investment account.
• Paycheck Protection Program (PPP) – The new legislation provides about $285 billion in additional funding for Paycheck Protection Program (PPP) loans. If you own a business, you may be eligible for a PPP loan, even if you already received one from last year. The loan is forgivable if at least 60% of the money is spent on employee payroll costs, with the other 40% going for other allowable expenses. The new legislation expands the definition of allowable expenses for PPP loan forgiveness and clarifies that business expenses paid with PPP proceeds are tax deductible. Also, $20 billion of new money has been allocated for Economic Injury Disaster Loan (EIDL) grants. Priority for second PPP loans and EIDL grants will be given to small businesses (with 300 or fewer employees) that had a significant decline in revenue. You can apply for a PPP loan through any existing Small Business Administration (SBA) lender or through a participating bank or credit union. To begin the application process, visit the SBA website at sba.gov.
• Unemployment assistance – The new legislation provides an additional $300 per week to recipients of unemployment insurance for weeks of unemployment starting after Dec. 26, 2020, and ending on or before March 14, 2021. It also continues the expanded eligibility of benefits under the CARES Act and provides an additional 11 weeks of unemployment benefits through March 14, 2021, for those who remain unemployed after state employment benefits are no longer available. If you haven’t already done so, contact your local unemployment office to apply for benefits.
• Rental assistance – The relief legislation provides $25 billion of rental assistance to state and local governments for paying rent, utilities and housing stability services. To find out if you’re eligible for aid, contact your local Housing and Urban Development (HUD) office or visit the HUD website at hud.gov. The new relief package also extends the current eviction moratorium through Jan. 31, 2021.
• Charitable cash contributions – The new legislation extended the above-the-line deduction for cash contributions to charities for those who don’t itemize deductions. For 2021, the maximum deduction is $300 for single filers and $600 for joint filers. For those who itemize, the legislation extends the CARES Act provision that suspended the 60% of adjusted gross income limit for charitable deductions.
Hopefully, 2021 will be the year in which we put the pandemic behind us. But in the meantime, you may get some valuable aid from the new relief package.