Expert Insights on Round Two Stimulus Payments, Unemployment and Other Benefits for Individuals and Families in Distress
Tuesday, January 5, 2021
The federal government has begun sending a second round of stimulus payments to most taxpayers. This fact sheet describes the key aspects of this most recent government benefit.
Who gets it?
Generally, anyone who received a stimulus check the first time around is eligible to receive the second payment.
Round one stimulus payments did not go to many taxpayers whose spouse or dependent child did not have a work-eligible social security number. Those taxpayers are now eligible to receive both rounds of payments. The amount of the payment will reflect the total number of eligible individuals in the household.
Round one stimulus payments did not go to young people over the age of 16 who were claimed as a dependent on someone else's tax return. Those individuals still do not qualify. Nor will any money go to the person who claimed them as a dependent.
How much will someone get?
Individuals get $600. Married couples get $600 for each spouse with a work eligible social security number. An additional $600 will be included for any child under the age of 17 who was claimed as a dependent on the 2019 tax return. You have to fall below certain adjusted gross income limits to qualify for the full amount. The same limits that applied to the first found of payments will apply to the second round. The amount of the payment is reduced if your adjusted gross income exceeds that amount.
What form will the payment take?
If you received your first payment by direct deposit, the IRS intends to pay you the sam way this time around. Social security recipients and other beneficiaries who received the first payment via Direct Express will receive the second payment the same way. Anyone not receiving a direct deposit will be paid by check or debit card through the mail. The IRS will relaunch the Get My Payment tool to permit people to track the status of their payments.
What do you have to do?
In most cases, nothing. The IRS will automatically send you your money. They are required by law to do so by January 15. If you qualify and don't receive your payment by then, you will have to file a 2020 tax return and claim a Recovery Rebate Credit. That will cause your tax bill to go down or your tax refund to go up.
Supplemental COVID-19 Relief for Individuals in Distress
President Trump recently signed a massive piece of legislation authorizing the federal government to provide a wide array of relief to American businesses and families. Most attention has been focused on unemployment benefits and the one-time stimulus payments being sent to individual taxpayers. However, there are several other more targeted items included in the law. Here are the principal ones that affect families in distress. Where necessary, individuals should seek out these programs to ensure they access all the assistance they are entitled to receive.
Eviction Moratorium and Rental Assistance
The national moratorium on evictions is extended through January 31, giving renters an additional month of protection.
In addition, families can now receive money to pay up to 12 months of rent and utilities. The money can be used to cover future bills as well as unpaid bills that have accumulated since the start of the pandemic. Renters must apply through agencies designated by state and local governments. Landlords can also apply on behalf of their tenants. The payments themselves are made directly to landlords.
In order to qualify, household income cannot exceed 80 percent of the median for the area. In addition, at least one member of the household must be at risk of homelessness or housing instability. Finally, at least one member of the household must qualify for unemployment benefits or experience financial hardship due to the pandemic.
Food Assistance
Starting January 1, monthly food stamp benefits will automatically rise by 15 percent. The increase will remain in effect for 6 months.
Child Care
$10 billion is allocated to support childcare providers and the families who use them.
Internet
Low income individuals can receive up to $50 a month to cover the cost of internet service.
Financial Relief for the Unemployed
Just as unemployment benefits were set to expire, President Trump signed legislation that extended those benefits into 2021. This fact sheet describes the range measures taken by the federal government to assist unemployed workers. Where necessary, individuals should apply for this assistance through the appropriate government agency.
Extension of Federal Unemployment Benefits
Federal unemployment benefits are extended through March 14. This will allow unemployed individuals to receive a total of 50 weeks of benefits, far beyond the limit that ordinarily applies under a state's unemployment insurance system. Anyone who has not received the maximum 50 weeks of benefits by March 14 will continue receiving a weekly check through April 5 until they reach 50 weeks.
Renewed Supplemental Payments
Under the original stimulus law, unemployment benefits included an additional $600 each week. That supplemental payment expired in July. The new law brings it back, but at a lower level. After December 26, weekly unemployment benefits include an additional $300. That supplemental payment will continue through March 14, for a total of 11 weeks.
Freelancers Continue to Qualify for Unemployment Benefits
The federal government is extending the program that pays unemployment benefits to freelancers, self-employed individuals and others who are not eligible to receive benefits under traditional unemployment compensation plans. Those benefits will continue through March 14. That permits someone to receive up to 50 weeks of benefits in total. As under the traditional program, anyone who has not received the maximum 50 weeks of benefits by March 14 will continue receiving a weekly check through April 5 until they reach 50 weeks.
There is a special rule that applies to people who do freelance work and who also earn income as an employee. If they are eligible to receive regular state unemployment benefits, they may not be eligible to receive benefits for any freelance work that they can no longer perform. In that case, an additional $100 will be added to the $300 supplemental payment included in their weekly benefit.
Richard Winchester is a Visiting Professor of Law at Seton Hall University School of Law and is a national authority on small business and federal employment tax policy. His work is frequently cited in Congressional Reports on tax matters and in media outlets throughout the U.S. Prior to teaching, Winchester worked as a corporate tax attorney for PricewaterhouseCoopers in its National Tax Office.
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