There has been a lot to keep up with coming out of the senate over the last months and more is on the way. We first had the SECURE Act in December 2019 which had monumental changes to the tax code- mostly with retirement and legacy planning. Then we had the historic CARES act in March 2020, which I discussed via newsletter and on the Lifepoint Blog. Now at the senate we have another stimulus bill with the introduction of the highly politicized and controversial HEROES Act. With each bill being thousands of pages long, how is the taxpayer supposed to keep up with it all? And how do you know what you should be doing to take advantage of these bills? I’m here to simplify these bills and arm you with the right strategies for your unique situation. It starts with understanding what is currently being proposed in this bill.
By The Numbers:
The current proposed HEROES Act in the senate provides $1,000,000,000,000 in additional stimulus support. That’s a lot of 0’s!! Here is the general overview of where that funding will go:
· $6000 maximum direct payments to each family
· $200 billion for hazard’s pay to essential workers
· $75 billion to coronavirus testing and tracing
· $175 billion in housing support, student loan forgiveness, new employee retention tax credit and extended unemployment benefits
· $25 billion to the US Postal Service
What Else Does It Include:
The second round of stimulus to support American individuals and families is expected to be exactly like the first round. Individuals earning up to $75,000 will receive $1200 stimulus money and couple earning up to $150,000 will receive $2400 stimulus money. Up to three dependents will earn an additional $1200 each. New to the stimulus is the earning of $200 for immigrants with Tax Identification Numbers.
The HEROES Act proposes $100 billion to protect renters by distributing funds through an existing nationwide grant rental assistance program that verifies a tenant’s inability to pay rent. It grants those tenant’s vouchers to cover the cost of rent and utilities. In addition, it bans eviction of a tenant for nonpayment for up to one year.
$75 billion is provided to a homeowner assistance fund meant to prevent mortgage defaults and property foreclosures.
For the over 30 million who have claimed unemployment due to coronavirus, the HEROES Act extends unemployment benefits (including the extra $600 weekly federal unemployment) through January 2021. Gig workers, independent contractors, part-time workers and the self-employed can also receive unemployment benefits through March 2021.
Hazard’s pay is $13 per hour pay premium in addition to current pay for all essential workers through the end of 2020 to the maximum of $25,000 for those who earned less than $200,000 per year. Up to $5,000 is eligible for those earn more than $200,000.
Student loan forgiveness has been long debated and proposed several times over by Democrats. The HEROES Act currently is allowing for $10,000 of federal student loan forgiveness and $10,000 of public student loan forgiveness. In addition, it will continue the suspension of loan payments, interest and collections on government-held federal student loans through September 2021.
The HEROES Act is highly politicized and some are saying it will be dead upon arrival at the senate. However, both parties do believe that more stimulus is needed to keep this economy from completely falling apart. It will likely be a few weeks until we see this bill come before the senate to have any say of where this bill will end up. Personally, I believe something will get passed, but not before much debate about what should be added and taken away from this current edition.
The coming weeks will have much to tell.
Michael Metzger CA Insurance LIC# 0H86440 is a Registered Representative with and Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
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