What’s in the second stimulus package?

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On Sunday, December 27, 2020, President Trump officially signed off on the second stimulus package for Americans. This second coronavirus stimulus package totals $900 billion. Keep reading if you have questions about what’s in the second stimulus package, who can get it and what to do if you don’t receive it.

The Second Stimulus Package

The Consolidated Appropriations Act, also known as the second stimulus package, was passed in the Senate as a bill on December 21, 2020. President Trump signed it on December 27. This $900 billion stimulus relief package is the second round of financial support from the federal government to the American people during the coronavirus pandemic.

The stimulus check offers $600 to qualifying adults and children, which is a 50 percent decrease from the initial $1,200 stimulus checks given for adults earlier in 2020.

The second stimulus package had some other alterations from the first stimulus package as the government made efforts to extend the payment to individuals unable to qualify for the original payouts. Some notes include:

• Mixed families of American citizens and partners without green cards can now qualify for this stimulus. This group was initially not covered in the Coronavirus Aid, Relief and Economic Security (CARES) Act.
• Children under 17 will receive the same payment ($600) as adults. In the initial stimulus payout, adults received $1,200, while children received only $500.
• In most cases, adult dependents aged 17 to 24 will not qualify for stimulus money. This includes disabled individuals, some college kids and some seniors.
• There are lower income thresholds for both single filers and married couples compared to those in the CARES Act. This means individuals who may have qualified for the initial stimulus check may not receive this second payout.

Details of the Second Stimulus Payment

While the entire stimulus relief package is $900 billion, only $166 billion of the total package amount goes toward stimulus payment. Most Americans with an adjusted gross income lower than $75,000 can expect to receive $600 for themselves and $600 per child dependent.

Who Qualifies to Receive It?

If your adjusted gross income is $75,000 or less, you will receive $600. If you have child dependents, you will receive $600 per child. However, child dependents will be identified by the IRS definition of a “qualifying child” as being under 17 years of age. Therefore, only children who were under 17 on their parents’ 2019 income tax return will qualify for the $600 payout.

Married couples who earn a combined total of $174,000 or more will not be eligible for this stimulus. The CARES Act previously had the limit for married couples at $198,000.

Those who were marked as adult dependents on their 2019 taxes are ineligible for this round of stimulus funding unless they file independently on their 2020 taxes (in which case they would get the stimulus money retroactively). This includes college students who are claimed as dependents by their parents, as well as adults that are claimed as dependents due to their age or a disability.

The CARES Act didn’t benefit families with an American citizen married to a resident without a green card, but this second stimulus package does so long as the spouse without the SSN meets specific criteria.

To see the status of your payment, you can use the Get My Payment tool on the IRS website.

Will the Stimulus Money Be Taxed?

No, the government will not be taxing the stimulus payments. A stimulus payment isn’t considered income by the IRS and won’t be eligible for income tax. This means your stimulus check won’t impact your next income tax return.

Can the Stimulus Money Be Garnished?

No, your stimulus money can’t be garnished. This is quite a difference from the initial CARES Act payout, which allowed individuals who owed more than $150 in child support to have their stimulus payment garnished. This second stimulus payment doesn’t allow garnishing, even in the case of child support.

The only exception is for overdraft fees from banks. Ifyou receive a direct deposit, a bank may choose to use it to cover any outstanding overdraft fees.

What If You Don’t Receive Everything You’re Owed?

Some individuals may find they don’t receive the full allotment of their stimulus check. This could be due to various factors, such as changing banks or the wrong income year being considered for your income threshold. Whatever the case, recourse is available.

Individuals who didn’t receive their entire payout can claim their full stimulus payment amount as a Recovery Rebate Credit on their 2020 federal income tax return by filling in 2021. Note that this credit rebate includes the first stimulus payment as well.

Unemployment Benefits

Of the $900 billion package, $120 billion is going toward an extension of increased federal unemployment benefits. Qualifying individuals can receive $300 per week until March 14, 2021.

Freelancers, the self-employed and contractors can received an additional $100 per week on the $300 unemployment payout in some circumstances. This is meant to help individuals who typically have a combination of contract work and regular work.

Paycheck Protection Program

Approximately $284 billion of the total package goes toward forgivable loans via the Paycheck Protection Program, initially created under the CARES Act. Originally, the program looked to help small businesses (with fewer than 500 employees) cover employee wages, rent and utilities. The program stopped taking applications for loans in August.

Now, the second stimulus relief package has reopened applications. However, there are new rules in place. Applicants can only borrow up to $2 million. Additionally, businesses must meet the following criteria:

• Fewer than 300 employees
• At least a 25 percent drop in sales for at least one quarter in 2020 compared to 2019

The Paycheck Protection Program also specifically set aside $12 billion for minority-owned businesses.

Foreclosure Moratorium

The Department of Housing and Urban Development has chosen to extend the moratorium on evictions and foreclosures. Specifically, individuals are protected from eviction until January 31 and from foreclosures until February 28.

Note that the foreclosure moratorium only applies to mortgages backed by the Federal Home Administration (FHA). The FHA has become a common avenue for first-time home buyers, who may be hit the hardest by coronavirus, so this is especially beneficial for this group.

However, just because your mortgage isn’t backed by the FHA doesn’t mean you can’t get help. Many creditors are offering COVID-19 relief; you simply have to make your situation known.

Other Benefits

There are additional benefits in the second stimulus package, including these:

• $3.2 billion to help qualified low-income families receive an additional $50 per month to help cover the cost of internet
• $300 million to help improve internet broadband infrastructure in rural areas that have historically struggled with slow internet speeds
• $13 billion for food security
• Vaccine programs
• A ban on surprise medical bills (starting in 2022) that states patients only have to pay their regular deductibles and coinsurance; health providers will have to work with insurance providers to cover the rest
• New climate legislation, as well as $35 billion for clean energy projects such as wind and solar energy sourcing

Know What You’re Entitled to in the Second Stimulus Package

Now that you know what’s in the second stimulus package, it’s up to you to make sure you get what you deserve. After all, mistakes can happen as the government works on executing the many promises laid out in the Consolidated Appropriations Act.

It’s possible that more pandemic-related legislation will be passed during the Biden Presidency, but until we have more information on that, focus on understanding how you can benefit from the government’s help now.

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