March 15, 2021
President Joe Biden on Thursday signed into the law a new stimulus bill, to the tune of $1.9 trillion, that aims at addressing a sluggish economy and helping families and business owners that have borne the brunt of the coronavirus pandemic.
Needless to say, there’s plenty of help in the bill, including new stimulus payments for American taxpayers, unemployment benefits, and critical assistance for parents.
Of course, the professionals at Perlson LLP are poring over the bill and analyzing its contents to ensure our clients get the full benefit of all of its provisions. And we encourage you to call Perlson at 516-541-0022 if you have any questions.
But in the meantime, please read below for our rundown of the major components in the $1.9 trillion stimulus bill and how it may affect you, your family, and your business:
American taxpayers will soon receive $1,400 stimulus checks as part of the new bill. Individuals who earned up to $75,000 per year and couples who make up to a combined $150,000 per year are eligible to receive the $1,400 stimulus payments. Individuals earning more than $80,000 or couples who earn more than $160,000 will not be eligible to receive stimulus checks.
To be clear, the $1,400 stimulus checks are allowed for each person in a family.
Child Tax Credit
The new stimulus bill allows for parents with children under the age of 6 to receive $3,600 in child tax credits and for parents to receive $3,000 a year for children between the ages of 6 and 17.
The bill allows for the payments to last for one year, and will be sent to parents on a monthly basis, starting in the coming months. Those with children under the age of six, for instance, will receive $300 a month per child.
Previously, the Child Tax Credit allowed for $2,000 per child. Those who don’t qualify for the new program can still qualify for the old rule.
The tax credit begins to phase out at $150,000.
Child and Dependent Care Credit
A host of changes have come to the Child and Dependent Care Credit. For one (and for 2021 only), the credit is refundable and is valued at 50% of eligible expenses, up to $4,000 for one individual and up to $8,000 for two or more. However, the credit begins to phase out at $140,000 in household income.
Additionally, the provision increases the employer-provided dependent care assistance exclusion to $10,500 for 2021 only.
Employee Retention Tax Credit
The Employee Retention Tax Credit, which has been used to incentivize employers to keep their employees on staff with tax credits, has been extended through the end of 2021. The ERTC can also now be used as a credit against Medicare tax and includes provisions that include start-up companies to qualify.
The $300 supplemental weekly unemployment boost has been extended to September 6. Additionally, the bill calls for the first $10,200 in unemployment benefits to be waived for tax liability. However, that tax waiver applies only to individuals who earned less than $150,000 in adjusted gross income in 2020.
Restaurants that have been hit hard by the pandemic will see some relief in the stimulus bill, thanks to a $28.6 billion allocation to the restaurant industry. The bill allows for individual restaurants to receive up to $5 million in grants as part of that funding and for restaurant groups to receive up to $10 million in grants. The Small Business Administration will manage the program, which will allow restaurants to use the funds for payroll, debt costs, rent, and hiring.
The new stimulus bill allows for $20 billion to be used for emergency rental support and relief for homeless individuals. Another $10 billion will be allocated to mortgage and homeownership relief.
Pension Plan Bailouts
Ailing pension plans received some much-needed support in the new stimulus bill. Pensions that would have otherwise failed or not paid U.S. retirees will now receive $86 billion to capitalize their funds and make required payments.
COBRA Health Insurance
Through 2021, the U.S. government will pay 100% of COBRA insurance premiums. The COBRA payments will be given to employers and that amount will need to be passed on to the COBRA enrollees.
Students will also see some benefit from the stimulus bill. It includes $1.25 billion for summer enrichment programs, as well as $1.25 billion in after-school programs. Another $3 billion will be allocated to educational technology.
State and Local Government Support
States, cities, tribal governments, and U.S. territories will receive $350 billion in stimulus funding.