How the Upcoming Stimulus Bill May Affect Your Income
by Susannah McQuitty
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As the next stimulus package, the Health, Economic Assistance Liability Protection and Schools Act (HEALS Act), makes its way through negotiations, some features are gaining clarity and promise—especially in terms of stimulus payments (known as Economic Impact Payments or EIPs) and unemployment insurance benefits.
Here’s what we know so far, and be sure to check back as updates unfold!
Will I get another stimulus check?
EIPs seem to be a key feature of the next stimulus package, and the $1,200 amount looks to have some stickability (including the same income limitations and phase-out thresholds—round two is essentially identical to the first round of EIPs). Whether or not you receive a stimulus payment depends on your financial status, but if you qualified for one earlier this year, you will likely qualify for a comparable amount.
The proposal also includes $500 for dependents; Congress will surely debate this amount in the coming days. Also, the definition of “dependent” is expanded to include adult dependents. You’ll recall that the definition for round one only included dependents 17 and younger.
Will this Economic Impact Payment (EIP) be structured as a rebate like the first round?
Yes, according to the initial proposal. Stimulus 2.0 payments will essentially be an advance of a 2020 refundable tax credit with eligibility based on 2018 or 2019 tax returns.
Will I still get unemployment insurance under the new stimulus package?
The proposed Federal Pandemic Unemployment Compensation (FPUC) benefits are significantly different from the CARES Act, but benefits are still available. Instead of the additional $600 per week that began to phase out in mid-July, this new structure for unemployment benefits would begin in October and provide up to 70% replacement of the taxpayer’s lost income when combined with the state portion of unemployment benefits. The FPUC benefit would be $200 per week, down from $600, through September 2020. There are many details that need to be ironed out in this portion of the stimulus bill, but as of publication date, the 70% payroll match is the modus operandi.
Unlike an EIP, unemployment insurance is treated like earned income and will be taxed accordingly.
How soon will this stimulus package be released?
A finalized plan should be complete by early August, though it may take weeks longer for some states to implement the unemployment insurance changes. Shortly after the package is approved, stimulus payments will begin to roll out. How quickly that process will begin (and how long it may take for you to receive your payment) is still uncertain, but we’ll keep you up-to-date on the 1040.com blog!
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