Covering Your Assets: Individual impacts of newest COVID relief bill (Voices)
Covering Your Assets
On December 21, 2020, Congress passed the “Consolidated Appropriations Act, 2021,” the omnibus spending bill for the fiscal year that began October 1.
The bipartisan bill, which is over 5,000 pages long, is the fifth phase of legislation aimed at fighting the COVID-19 pandemic and mitigating the related economic harm for families, workers and businesses.
Among other things, it includes $600 stimulus checks for most Americans. After holding up the $900 billion coronavirus relief bill for nearly a week and urging Congress to increase the amount of stimulus checks to $2,000, President Trump on December 27 signed off on the package.
As an extension of last week’s column, I wanted to give an overview of the portions of the bill that impacts individuals:
Another round of economic impact payments will be paid, this time up to $600 per individual, plus $600 per qualifying child (age 16 and younger who are dependents) — or potentially higher amounts (such as $2,000 for single individuals or $4,000 for a couple) if Congress modifies the package in response to President Trump’s request.
Similar to the first round of checks, the benefit phases out for individuals with adjusted gross income (AGI) between $75,000 and $99,000; or $150,000 and $198,000 for married couples. Anyone alive for a day in 2020 can qualify.
Enhanced unemployment benefits
There will be an additional $300-per-week unemployment benefit (beyond state-provided benefits) available through March 14, 2021. The enhanced benefit that expired earlier in the year was $600 per week.
The CARES Act from the spring allowed individuals to deduct cash contributions made to qualified charities during 2020 without regard to the normal income limits. It also allowed non-itemizers to claim an above-the-line deduction for up to $300 of cash donations.
The new law extends both of these provisions for donations made through 2021 and increases the amount of above-the-line deduction available to married couples to $600 (from $300).
Eligible educators can deduct up to $250 in qualified expenses. The list of qualified expenses was expanded to include PPE, disinfectants and other supplies used for the prevention of the spread of COVID-19.
Most tax extenders affecting individuals will be further extended. Some of the provisions — such as the principal residence debt exclusion up to $750,000 and the exclusion for employer payments on employee student loans — were extended through 2025.
Other provisions were made permanent, including the lower 7.5% threshold for medical expenses and the “above-the-line” tuition and fees deduction.
As is often the case, more will be known in due time, but time will tell if taxpayers will be given sufficient notice to proactively plan.
The advice in the article is general in nature. Contact your CPA to determine how these apply to your specific fact pattern.
Michael D. Bosma, CPA, is Principal-in-Charge of Keystone CPAs and a business broker with M&A Business Advisors in Reno. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at firstname.lastname@example.org.
From a national standpoint, research shows the embrace of digital commerce is a whole decade ahead of schedule thanks to the pandemic. We spoke with the Retail Association of Nevada, Downtown Reno Partnership and the Reno+Sparks Chamber of Commerce to give local context to the growth of online retail.