A coronavirus relief bill, dubbed by some as the “Coronavirus Stimulus 2.0” bill, was signed by President Donald Trump on Sunday night, December 27 as part of the $2.3 trillion, 5,000+ page Consolidated Appropriations Act of 2021. It includes a $900 billion COVID relief package, avoids a government shutdown, and extends unemployment benefits.
President Trump’s delay in signing the bill may translate into a gap in benefits for more than 12 million Americans. However, benefits are retroactive so all Americans will receive what is due to them. President Trump is also encouraging the $600 stimulus checks to be raised to $2,000, which will require a separate bill which is being considered by some Senate leaders.
Here are key provisions of the stimulus bill.
Personal Income Tax Changes, Extensions & Charitable Giving
- The hurdle to deduct medical expenses has been permanently lowered to 7.5% of Adjusted Gross Income (AGI).
- The bill extends the Qualified Charitable Contribution of $300 per taxpayer as an above-the-line charitable contribution into 2021 (please note that joint filers can deduct $600 in 2021, which is not the case for 2020).
- The bill extends limitations for cash gifts to charity (Donor Advised Funds are not eligible) to 100% of AGI in 2021. Cash gifts are normally limited to 60% of AGI.
Additional Recovery Rebate Checks
- Qualified taxpayers will receive a check for $600 per taxpayer with an additional $600 per child under age 17.
- The amount begins phasing out $75,000 (single filer), $150,000 (joint filer), and $112,500 (head of household filer).
- Eligibility is based on the 2019 tax return, but will be “trued-up” based on the 2020 tax return (please note there is no clawback if 2020 income is higher than 2019 income).
- Those who qualify based on their 2019 tax return will receive a check. If you qualify based on your 2020 tax return, you get a refundable credit at filing.
Extension of Unemployment Benefits
- Regular unemployment benefits are extended another 11 weeks.
- Unemployment benefits are extended to self-employed individuals through April 5, 2021.
- Regular unemployment benefits are increased by $300/week for 11 weeks.
What isn’t included?
- The temporary waiver of Required Minimum Distributions (RMDs) in 2020 will not be extended into 2021.
- No relief was offered for unwanted 2020 RMDs (i.e., there will be no further opportunities to return the unwanted RMD to avoid the taxation of the income).
- No further student loan relief for federally backed student loan.
If you have questions about whether or not the “Coronavirus Stimulus 2.0” bill affects your unique situation, call you financial planner.