Coming in at 1,815 pages, the new coronavirus relief bill proposed and approved by the House is a giant wishlist. Named the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, it includes:
- $540 billion for states, territories and tribal governments;
- $100 billion for a public health and social services emergency fund;
- $100 billion for emergency rent assistance;
- $90 billion for state grants to support public school systems;
- $75 billion for a homeowner assistance fund;
- $75 billion for COVID-19 testing and and contact tracing and
- $25 billion for the postal service.
All told, just the appropriations take up 140 pages and add up roughly to $3 trillion. When combined with the costs of the Coronavirus Aid, Relief and Economic Security (CARES) Act and the interim bill after it, that’s a whopping $6 trillion in aid so far. The House approved the bill last Friday; the Senate, though, says it wants to see the impact of the last stimulus bills before considering a new one. In the meantime, here are the highlights related to personal finances and small businesses – including another round of stimulus checks.
Stimulus Checks, Round 2
The new bill provides for a second round of stimulus checks, also called economic impact payments. They would be for the same amount: $1,200 for individuals and $2,400 for married couples who file jointly, with the same income caps. The two big changes are that the amount for dependents is raised from $500 to $1,200 per dependent, and that eligible dependents can be 17 (last round, they had to be younger than 17, so 16 and younger). Also, the bill clarifies that these payments are not taxable and cannot be garnished.
Advance Payment of Child Tax Credit
The HEROES Act increases the Child Tax Credit from $1,000 to $3,000 for each qualifying child. It also authorizes the Treasury Secretary to issue advance payments of the credit (normally it is just applied to your tax bill), depending on eligibility requirements to be set by the Secretary. The definition of qualifying children would be extended, again, to include those who are 17 years old.
Emergency Rental Assistance
The new coronavirus bill provides $100 billion for a fund to be used for providing temporary assistance for paying rent, utilities and other expenses – to people at risk of homelessness. These people are defined as those 1) whose income is below 80% of the median income for the area, and 2) who have insufficient resources to pay for rent and utilities due to financial hardships.
More Homeowner Assistance
The House bill provides for a $75 billion fund that would be allocated to state housing finance agencies to help prevent homeowner mortgage defaults, foreclosures and evictions of Americans experiencing financial hardship during the pandemic. The Treasury Secretary is to determine and administer the terms of fund disbursement.
Extension of Federal Pandemic Unemployment Compensation
The Pandemic Unemployment Assistance (PUA) program recently created in response to COVID-19 expanded who could receive benefits and extended unemployment benefits for 13 weeks, with all coverage ending on December 31, 2020. The new bill amends the deadline to early 2021 so that payments can be until March 31, 2021. The PUA also provides $600 per week in additional benefits that end on July 31, 2020; the new bill also changes this deadline so that payments can be until March 31, 2021.
Waiver of Required Minimum Distributions (RMDs)
The CARES Act authorized the waiver of RMDs that had not been taken yet for 2019. The new bill allows for all RMDs for 2019 to be waived, so that retirees who already received them can return them to their retirement accounts. (The bill also waives the 60-day limit of how long you have to return a distribution to a 401(k) or IRA.) The CARES Act also waives RMDs for 2020.
Elimination of State and Local Tax Deduction Cap
The Tax Cuts and Jobs Act of 2017 imposed a $10,000 cap ($20,000 for joint filers) on the amount of state and local taxes you can claim as a deduction on your taxes. With the new bill, the House tries again (it tried just last December, too) to lift the cap for 2020 and 2021.
Increase in Above-the-Line Deductions for School Teachers and First Responders
The bill increases the allowed above-the-line deduction for elementary and secondary school teachers from $250 to $500. It also allows this deduction for COVID-19-related supplies and equipment for first responders and other front-line employees.
$10 Billion More for Emergency Economic Injury Disaster Loan (EIDL) Grants
So far, Congress has appropriated $20 billion for COVID-19 EIDL advances to small businesses. These advances can be for up to $10,000 and are completely forgivable, which is why they’re also called grants. The new bill provides another $10 billion for the oversubscribed program. (The SBA has been limiting the amount of the advance to $1,000 per employee, up to 10 employees, so that it could give the money to more businesses.) Also, the bill clarifies that these grants do not count as gross income and are not taxable.
Paycheck Protection Program (PPP) Fixes
Considered the centerpiece of the CARES Act, the PPP provides forgivable loans to small businesses if they maintain their head count and payroll. The program ran out of its first $349 billion within two weeks, and Congress quickly passed another bill primarily to infuse the program with another $310 billion. The PPP, though, is riddled with flaws, and the new bill seeks to fix some of them. Specifically, it extends:
- the period for when you can use the loan (to pay allowed costs and receive forgiveness) from eight weeks after you receive the loan proceeds to 24 weeks after your loan origination or by December 31;
- the deadline to rehire laid off workers in order to receive forgiveness from June 30 to December 31;
- the payment deferral period from six months to one year.
Also, the bill allows borrowers to be excused from rehiring if they can’t find qualified replacements and disallows any limitations on the non-payroll portion of a forgivable loan. (The Treasury had instituted on its own a 25% cap.) Additionally, the bill clarifies that forgiven loans do not count as gross income and are not taxable.
Employee Retention Tax Credit Increase
Finally, the coronavirus bill increases the Employee Retention Tax Credit. Before it could be applied to $10,000 in wages per employee. The new proposed bill changes that to $15,000 per calendar quarter for three quarters, so $45,000 total. Also, the credit is upped from 50% to 80% of wages.
Tips for Managing Your Finances During the COVID-19 Crisis
- Don’t go it alone during this unprecedented time. Use SmartAsset’s matching tool to find the right financial advisor for you. After you answer a handful of questions, we’ll connect you with up to three advisors who fit your needs.
- Calculate your monthly cash burn. Most of us know we should have budgets, but few of us actually do. But now is the time to account for your spending. It’s the only way to know where you can cut costs should you lose your job or have your pay decreased. Get more tips on how to prepare for a recession.
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