Round 2 – Covid-19 Relief Bill

You can take a look at the bill here. The package of for USD 2.3 trillion.

The first USD 1.4 trillion is for funding the federal government for the fiscal year 2021. The remaining USD 900 billion is coronavirus related relief. This article covers relief for individuals.

The coronavirus relief is as follows:

  1. An 11 week extension of the unemployment benefits that expired on Dec 26. This includes PUA (Pandemic Unemployment Assistance) that extends unemployment insurance to workers who are traditionally ineligible such as the gig economy workers and the independent contractors (originally 39 weeks plus additional 11 weeks), and FPUA (Federal Pandemic Unemployment Assistance), which will provide $300 supplement to state UI compensation. PEUC (Pandemic Emergency Unemployment Compensation) has also been extended for 11 weeks and will expire on March 14, 2021. Those individuals that have not reached their maximum (originally 13 weeks plus additional 11 weeks) will continue receiving them through April 5th if they have not reached their maximum number of benefits weeks.  
  2. Individual checks of $600 each including children will be included and begin to phase out for those who earn more than $75,000 ($150,000) for married filing joint & 112,500 for Head of household filing status). ITIN holders do not qualify, except for adoption ITIN holder. Children over the age of 17 do not qualify as a dependent for the check. No money is available for decedents in this round.

Individual income tax breaks

  1. EITC(Earned Income Tax Credit) and CTC (Child Tax Credit) will be based on 2019 income, instead of 2020 income.
  2. Charitable Giving – $600 deduction allowed for non-itemizers for 2021. Suspension of AGI limits for cash donations is extended to 2021, which is 100% of the AGI is allowed as charitable contribution.
  3. FSA – Flexible spending accounts for health care and dependent care – Any amount that is unused can be carried forward to 2021 and 2022.
  4. Medical expense deduction is permanently fixed. Qualified medical expense that is more than 7.5% of AGI for those that itemize on their tax returns, is deductible.
  5. Certain benefits of firefighters and emergency medical responders are excluded from income.
  6. Qualified tuition deduction in not available from 2021. It has been replaced with LLC(Lifetime Learning Credit)
  7. Business meals deduction of 100% is back for 2021 & 2022. This was capped tat 50% for prior years.

Rental Relief

  1. Eviction moratorium has been extended through January 31, 2021. USD 25 billion is to be used for future rent and utility payments. The rental assistance money can be used for past due payments and future rent payments, if renters co-sign the application for rent.
  2. Food assistance – the bill expands benefits for food and nutrition for low income, seniors and children.

Food assistance

The bill expands benefits for food and nutrition for low income, seniors and children.

Disclosure: This material has been prepared for informational purposes only. It is not intended as a substitute for personalized professional advice. You should consult your own tax advisors or contact us if you need help with implementing any ideas shared on this page.