Now that President Trump has signed the latest COVID-19 stimulus legislation passed by both houses of Congress just before the holiday break, some taxpayers could begin to see payments from the US Treasury hitting their bank accounts in the first few weeks of the new year. Additionally, the measure provides $325 billion for small businesses and includes another round of forgivable business loans under the Paycheck Protection Program (PPP). Let’s take a look at the main provisions and what you need to know.
1. Direct payments to individuals. This round of payments is a maximum of $600 (half of the $1,200 in the first round) and is based on different levels of taxpayer income than the payments in spring 2020. In this round, single taxpayers with $75,000 or less in 2019 adjusted gross income (AGI)—or $150,000 for a married couple filing jointly—will receive the full $600 ($1,200 for a married couple with no dependents under age 17). Above that level, the amount of the check is reduced gradually and falls to zero at $87,000 in AGI for a single individual ($174,000 for a married couple). You can use this online calculator to estimate the size of your check. If you received a check in the first round of stimulus and you are still at the same address and the same bank, you don’t need to do anything to apply for or receive your check. If you need to update your information with the US Treasury, you can do that by clicking here. Note that following President Trump’s insistence that $600 was too little, the House has passed a bill mandating checks starting at $2,000. It is far from certain that the Senate will go along, even with President Trump’s approval, but this new bill does not affect the payment of the $600 amount already contained in the law that has been signed by the president.
2. Assistance for small businesses. The new law includes $284 billion in forgivable loans for small businesses as an extension of the PPP offered in the first round of aid last spring. An extra $20 billion has also been appropriated for Economic Injury Disaster Loans (EIDLs) for businesses in low-income communities, and $15 billion more is earmarked for live venues, movie theaters, and cultural institutions (museums, etc.) that have been financially damaged by the pandemic. The new round also makes PPP funds available to nonprofit organizations. Importantly, the new law clarifies that businesses that received PPP loans and used them to pay business expenses will be able to deduct those expenses. There are some important differences: New loans are capped at $2 million, compared to $10 million in the first round. Applicants must have no more than 300 employees, instead of up to 500, and must demonstrate at least a 25% drop in revenues from the fourth quarter of 2019 to the same period this year. Like the first round of assistance, the PPP program will be administered through approved business lenders by the Small Business Administration (SBA); resources and instructions for applying can be found on their website (sba.gov) or by clicking here.
3. Unemployment assistance. The new stimulus package also extends unemployment benefits of $300/week for an additional 11 weeks, beginning as early as December 27 and lasting at least until March 14, 2021. A benefit program aimed at contract and gig workers that was slated to expire at the end of the year has also been extended through March as a part of the new law.
If you have more questions about how the new round of stimulus funding could benefit you or someone you care about, click here for additional information. To read the full text of the bill signed by President Trump, click here. And to find out more about the new effort to pass legislation increasing individual payments to $2,000, click here.
As we come to the end of a uniquely challenging year, I hope that you and your loved ones are healthy, safe, and moving forward with confidence into 2021. These are complicated times, and it’s more important than ever for you to have professional, reliable guidance in your financial affairs. I specialize in providing fiduciary financial planning and investment management that always places the client’s needs first.
If you would like a review of your portfolio or a second opinion on any aspect of your financial plan, please contact Empyrion Wealth Management.
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