1) Checks from the Government:
Some Americans will qualify for a one-time relief payment from the federal government, expected to be paid in the coming weeks. Beneficiaries can receive up to $1,400 per person or $2,800 for married joint filers, as well as $1,400 per child. Unlike the previous rounds of stimulus checks which capped the age of a child at 17, this round there is no age cap for dependents. The additional money for dependents will be added to those already receiving a stimulus check. You will not need to pay income taxes on the one time payment. The payments will decrease for individuals earning over $75,000 or married couples over $150,000, phasing out completely for individuals earning over $80,000/ joint filers over $160,000.
For parents of babies born or adopted in 2020, you can claim dependent benefits retroactively for the first two stimulus checks through the Recovery Rebate Credit on your 2020 tax return, potentially up to $1,100.
The IRS will use your 2019 tax return or 2020 (if filed) to determine your income. If you have lost your job in the last year or your income has decreased it is important to file your 2020 tax return as soon as possible to receive your maximum stimulus check payment. There is nothing you need to do to receive this money. The IRS will either mail you a check, or direct deposit the money if it has your account information. Payments will go out as early as March 12, 2021.
Learn more: https://www.irs.gov/coronavirus
2) Additional Unemployment Benefits:
The federal government has made temporary changes to unemployment insurance programs, increasing the number of people who qualify, how long they can receive benefits, and how much they can receive. Under the previous Consolidated Appropriations Act passed in December 2020, the additional unemployment benefits program ends on March 14, 2021.
In the recently passed American Rescue Plan Act, the federal government is adding $300 per week on top of what beneficiaries normally would receive from their state. These additional funds extend through September 6, 2021.
Additionally, the law extends the Pandemic Unemployment Assistance (PUA) program, which provides UI benefits to gig workers and others not traditionally eligible for them, for up to 74 weeks of unemployment benefits. While the Pandemic Emergency Unemployment Assistance (PEUC) for those who have exhausted their regular state unemployment benefits extends up to 48 weeks of assistance. To qualify, you must certify you are unemployed, partially unemployed or cannot work for reasons related to the coronavirus. You cannot receive this assistance if you are receiving paid leave or are undocumented.
The US Department of Labor is continually updating their site with additional unemployment insurance guidance.
For workers in Texas, the Texas Workforce Commission (TWC) has given additional guidance for self-employed, contract, and gig workers who have lost work due to COVID-19. These workers should apply for Pandemic Unemployment Assistance (PUA) using Unemployment Benefit Services (UBS).
When selecting a reason for job separation, these workers should select “reduced hours.” If the reduced hours are a result of COVID-19, these workers should select “COVID-19” under the disaster impact section. Complete all questions on the form to submit your claim.
The system will first review the claim for regular unemployment insurance eligibility, which will result in a denial. TWC will then automatically enroll these applicants in PUA.
Learn more: https://www.usa.gov/unemployment#item-214601
3) Child Tax Credits:
The American Rescue Plan increases the current child tax credit maximum from $2,000 to $3,000 per child up to 17 years old and $3,600 for children under 6 years old. Individuals making less than $75,000 and couples earning less than $150,000 will receive the full credit. Individuals making more than $95,000 and couples making more than $170,000 will receive the regular $2,000 per child. Previously these credits were partially refundable, now they are fully refundable. Traditionally families receive the credit once a year, but under the new law parents will get the payments in monthly installments.
Support for Businesses
1) Small Business Loans
Paycheck Protection Program Extended
The Payment Protection Plan (PPP) program has been extended with an additional $7.25 billion in funding, but does not extend the current application period which ends on March 31; however, there is a proposal to extend the submission deadline. PPP loans are available to businesses who experienced at least a 25% drop in sales from a year earlier in at least one quarter. Qualified businesses can be corporations or LLCs with under 300 employees, sole proprietors, self-employed and independent contractors. Some businesses that have already obtained a PPP loan may obtain a second PPP loan, called a “second draw.” PPP eligibility is expanded to not-for-profits listed in Sec. 501(c) of the Internal Revenue Code other than 501(c)(3), 501(c)(4), 501(c)(6), or 501(c)(19) organizations, Larger 501(c)(3) organizations and veterans’ organizations.
The loans provide 8 weeks of cash flow assistance through 100% federally guaranteed loans, and the money can be used for payroll, health care benefits, rent, mortgage interest payments, utilities, and interest on other debt obligations.
The amount of the loan is capped at $2 million. Borrowers can also request loan forgiveness for an amount equal to payroll costs, rent obligations, and utility payments paid during either the 8- or 24-week period after disbursement. The amount of the loan forgiveness is reduced for layoffs and certain wage reductions. Generally, borrowers are eligible for PPP loan forgiveness if they apply at least 60% of the proceeds to payroll. Partial loan forgiveness may be available to those who don’t meet this threshold. Amounts that aren’t wiped must be repaid and are subject to an interest rate of 1%.Expenses paid for with PPP loans would be considered tax deductible, officially reversing an initial IRS decision.
Some may qualify for Paycheck Protection Program Loan Forgiveness. You can read more on that program here.
Economic Injury Disaster Loans (EIDL)
The American Rescue Plan allocated $15 billion toward the “Targeted EIDL Advance” program. The program creates a $10,000 EIDL targeted advance that will be available to businesses and nonprofits that previously applied to for the original EIDL advance program.
This new program balances out previous EIDL advances so that qualifying businesses who did not receive the $10,000 advance in the old program can receive the full amount. Qualifying businesses are located in low income communities, have no more than 300 employees, and have suffered an economic loss of more than 30% as a result of the COVID pandemic. Loss is determined by an entity’s gross receipts declining in an 8 week period between March 2, 2020 and Dec 31, 2021, compared to an eight week period immediately preceding March 2, 2020.
The SBA will reach out to those individuals/businesses who qualify for these programs. Funds from the “Targeted EIDL Advance”program shall not be included in the gross income of the person receiving the grant.
THE INFORMATION IN THIS MEMO SHOULD NOT BE CONSTRUED AS LEGAL ADVICE OR LEGAL OPINION. THIS MEMO PROVIDES NO LEGAL OR COMPLIANCE ADVICE. COMPANIES SHOULD CONSULT WITH COUNSEL TO ENSURE FULL COMPLIANCE WITH ALL LEGAL REQUIREMENTS