Stimulus 2.0 is here
Happy New Year
Finally, after months of debate, Stimulus 2.0 is ready to go. Stimulus checks should be in process rather quickly.
The stimulus includes $600 checks to eligible individuals, expansion of the Paycheck Protection Program for small businesses, Medical Expense Deduction hurdle made permanent, Charitable Contributions, Flexible Spending Account carry forward and more.
Eligible individuals include all people and children whom a child tax credit may be claimed, (under age 17). Each person, including eligible children will receive $600.00. As with most items involving the government, there are phaseouts.
Full checks will be received for the following:
- Single Filers Up to $75,000 of adjusted gross income (AGI)
- Joint Filers Up to $150,000 of AGI
- Head of Household Up to $112,500 of AGI
For every $100 above the AGI threshold, a reduction of $5 should be expected. For example, a single person, with an AGI of $80,000 is $5,000 over the threshold. This person should expect to receive $350 ($5000 divided by $100 = $50 x $5, for a reduction of $250).
2019 tax returns will be used to determine your check amount however, if you’re phased out from 2019 but qualify for 2020, you’ll receive funds when you file your 2020 federal income tax return.
Eligible unemployed individuals will have their unemployment benefits extended by 11 weeks. Individuals will receive an additional $300 per week on top of their “regular” state-determined unemployment benefit, for all 11 weeks.
Additional Stimulus 2.0 Benefits
- Paycheck Protection Program is significantly expanded and now we have clarification of the income tax implications for businesses.
- Medical Expense Deduction is now made permanent. The hurdle for the deduction is now a firm 7.5% of AGI. In recent years, it’s been back and forth between 7.5% and 10%.
- Charitable Contributions; the CARES Act introduced in March 2020 created an above the line $300 charitable deduction for those that don’t itemize for 2020. This has been extended thru 2021. In 2021 only married filed joint files can deduct $600.
- Meal Expense Deduction; For 2021 and 2022, sole proprietors and other small businesses will be permitted to take a 100% tax deduction for business spending at restaurants. This is to encourage people to again start eating out. For me, this is a welcome change, however it’s so interesting how and when the government makes decisions.
- Flexible Spending Accounts (FSA’s); Funds deferred typically have to be used by year end or forfeited. There is now flexibility to use some of these funds the following year.
- Many other valuable components.
- No waiver of Future Required Minimum Distributions (RMDs); it appears those that are required to take RMD’s next year will have to do so. The one-year pause seems to be in the rearview mirror.
- No further Student Loan Relief; Stimulus 2.0 does NOT extend relief beyond January 31, 2021.
China – Important?
China has the 2nd largest economy in the world in terms of total Gross Domestic Production (GDP). GDP per-capita (per person) however, China only remains a fraction of the United States.
The United States is actually 3rd in GDP per-capita, behind Singapore #1, and Norway #2. How many of you would have guessed that correctly? Not me!!
For years China has grown by infrastructure expansion for roads, dams, airports, rail systems and cities. The belief is China will now turn its attention to focus on increasing the living standards of their 1.4 BILLION people, yes 1.4 BILLION. We have 350 MILLION. Growth should favor business and consumer services including financial services and healthcare.
China is on track to overtake the United States in terms of the overall size of its economy within the next decade?
Happy New Year!
I’d like to take a moment to wish everyone a very Happy New Year. 2020 has been unlike any other, and most of us will be happy to welcome the arrival of 2021. Let’s hope and pray the vaccine distribution process goes as smoothly as possible and so we can truly resume life as desired!!