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What's in the New Stimulus Package?

What's in the New Stimulus Package?

December 31, 2020
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The latest COVID-19 relief bill, officially called the "Consolidated Appropriations Act, 2021" has officially been signed into law. With a length nearing 5,600 pages, there is a lot to take in. Here are some highlights:

Economic Impact Payments (EIP)

Eligible people are those who are not dependents of another person, hold work-eligible Social Security numbers, and have an AGI that is:

  1. Below $75,000 for Single Filing taxpayers.
  2. Below $112,000 for Head of House Filing taxpayers.
  3. Below $150,000 for Married Filing taxpayers.

The full credit is $600 per individual including $600 for each dependent child. Those who are above the threshold can still receive a partial EIP. The EIP will be reduced by $5 for every $100 their AGI exceeds the threshold. This is the same methodology that was used in the first round of EIP.

This credit is not taxable and is considered a tax refund. This payment does not count towards any federal programs as income or an asset for testing purposes. Owed court ordered child support could cause a garnishment in pay.

If a child was born in 2020 and the child is eligible, or if you believe you are eligible for an EIP, there will be an opportunity to claim the credit on the 2020 tax return.

Unemployment Assistance

For those who are unemployed, the benefits have been extended 16 weeks. Federal Unemployment Benefits will continue to be supplemented at $300 per week into April 2021.

Rental Assistance

The eviction moratorium will extend until January 31, 2021. The federal mandate does not negate late fees, but some local ordinances may.

Broadband Subsidy

The broadband subsidy has been extended. The subsidy is $50 per month for those who qualify. Those who qualify are:

  1. Low income Americans.
  2. People who have been financially impacted by COVID-19.
  3. Families who are eligible for free school lunches or college Pell Grants.
  4. People who have lost jobs during the pandemic.

Recipients of this subsidy can use up to $100 towards the purchase of a laptop, desktop, or tablet.

Student Loans

Student loan forbearance has been extended until April 1, 2021.

Medical Bills

This legislation included provisions ending Balance Billing. Balance Billing is when out of network medical providers bill patients for amounts their insurer did not cover. This will help end unknown medical bills.

Income Tax Updates

  • The special $300 above line charitable contribution for non-itemizers has been extended to 2022.
  • For individuals, the amount deducted can be $300, while it can be $600 for Married Filers. The penalty increased from 20% to 50% for those who overestimate this deduction.
  • The medical expense deduction floor has been reduced from 10% to 7.5%.
  • For businesses, the meal deduction has been raised to 100% deductible until 2022 to help the struggling restaurant industry.