COVID-19 stimulus package dissected

Home Columns COVID-19 stimulus package dissected

(First of two parts)

By Roman Basi

 There has been a lot of information circulated with regards to coronavirus-related legislation that’s either been signed into law or is currently proposed. However, some of the information is either inaccurate, a mixture of truth or just plain false. Part I of this article discusses some of the stimulus packages that have already passed.

On March 4, 2020, Congress passed the first coronavirus package in the amount of $8.3 billion. Roughly $500 million was allocated to allow Medicare providers to administer telehealth services to assist elderly patients unable to leave their homes; $2.2 billion was allotted for federal, state and local public health agencies to prevent, prepare and respond to the coronavirus. In addition, $1 billion in loan subsidies was set aside to be made available to help small businesses, agricultural cooperatives, aquaculture producers and nonprofit organizations. Lastly, more than $3 billion was distributed for research and development of vaccines, therapeutics and diagnostics to prevent or treat the effects of coronavirus.

On March 18, the Family First Coronavirus Response Act was passed by Congress. This stimulus package covered the full cost of COVID-19 testing for all Americans, including those uninsured. The package also accounts for two weeks of paid sick leave for workers at companies with 500 or fewer employees (this portion was estimated to help approximately 87 million Americans). The package also included more than $1 billion to maintain federal nutrition assistance, such as subsidized lunches for low-income children, food banks and meals for eligible seniors in addition to $1 billion to help states process and cover unemployment insurance claims.

The third coronavirus stimulus package was passed by the Senate on March 25 and subsequently passed by the House of Representatives and signed by President Trump. The legislation paves the way for direct payments of $1,200 per individual if they made $75,000 or less in 2018, or $2,400 per married couple filing jointly with an additional $500 to be paid per dependent if they made less than $150,000 collectively in 2018.  However, the payments would start to phase out for individuals with adjusted gross incomes of more than $75,000; those making more than $99,000 would not qualify at all. The thresholds are doubled for couples.

It’s important to note that phaseouts apply. For example, for every $100 of income above those thresholds, a recipient’s check will drop by $5. So, if you are a single filer earning $75,100, your check will be $1,195 ($1,200-$5). If you are a single filer earning $85,000, your check will be $700 ($1,200-$500). If you do the quick math on that, it means you’ll phaseout completely (meaning you’ll receive nothing) once you hit $99,000 as a single filer, $198,000 as a married couple filing jointly, or $146,500 for heads of household.

Another impact for individuals in this stimulus package is the freeze on federal student loan payments. Under the law, federal student loan payments would freeze until Sept. 30, 2020 without accumulating any interest or penalties.

The law also allows for tax-favored “coronavirus-related” distributions from certain retirement plans of up to $100,000; the 10% early withdrawal penalty would not apply. Also, income attributable to those distributions would be subject to tax over three years as opposed to one. Qualifying taxpayers would also be allowed to repay their retirement plans to make up for money withdrawn to pay coronavirus-related expenses, including loans and distributions. Required minimum distributions for 2020 would be waived.

The law also expands eligibility for small businesses (those under 500 employees) to receive a loan of up to $10 million under the Small Business Act. The loans could also be extended to sole proprietors, independent contractors and self-employed persons. A temporary Pandemic Unemployment Assistance program also provides benefits for those not traditionally eligible for unemployment benefits, including self-employed workers and independent contractors.

Part II of the article will cover other measures of the law, including tax credits, that directly benefit business owners.

Must Read

Builder confidence drops in June

Washington, D.C.—Rising material prices and supply chain shortages resulted in builder confidence dipping to its lowest level since August 2020, according to the National...

Schönox to debut new tech at TISE

Las Vegas—Schönox’s patented Hybrid Active Dry Technology is on display this week at the company’s booth (4347) at Surfaces. Schönox adopted “Hands ÖN” as...

Shaw creates new ‘Living Lab’

Dalton—Shaw Industries held its ribbon-cutting ceremony last Friday for a new Living Lab that the company said will serve as a real-life test environment...

Mohawk kicks off video contest at TISE

Las Vegas—Mohawk is kicking off its “Now That’s Perfect” video contest at The International Surface Event in Las Vegas. In partnership with the Certified...

Universal Fibers launches new brand expression, website

Bristol, Va.— Universal Fibers, a leader in the production of high quality, solution-dyed synthetic filament-based fibers for the flooring industry, announced the debut of...

Marazzi launches Treverksoul collection

Dallas, Texas—Marazzi has launched its new Treverksoul collection, an assortment of wood-look, glazed porcelain tile. “Our new Treverksoul was inspired by antique parquet floors, and...
Some text some message..
X