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COVID-19 IMPACT

Coronavirus Economic Relief Package of December 2020: What You Need to Know

Mark Steber

Chief Tax Information Officer

Published on: December 22, 2020

The much-anticipated emergency COVID-19 economic relief package was signed into law on December 27, 2020, after leaders of both parties in the U.S. Congress, along with the White House, reached an agreement on several pro-taxpayer provisions of the omnibus package.

Provisions of the bill include a new economic impact payment, the extension of additional unemployment benefits, additional monies for certain workers, and a safe-harbor consideration for taxpayers who qualified for the Earned Income Tax Credit (EITC) in 2019.

Currently, the main elements of the bill expected to impact taxpayers are as follows:

Second stimulus check / EIP payments

  • According to the U.S. Treasury Department, they will start processing these payments very soon - as in the next few weeks - to eligible taxpayers
  • These payments will be:
    • $600 per individual taxpayer and $1,200 per couple (phasing out at $150,000 for Married Filing Jointly and $75,000 for all others).
    • Individuals earning up to $87,000 and couples earning up to $174,000 will receive some form of payment. Individuals who earned up to $75,000 in 2019 will get the full amount of $600 and couples that earned up to $150,000 will receive $1,200.
    • $600 for each qualifying child dependent with details coming soon
  • Payments will also now be made to certain households that include taxpayers with Individual Taxpayer Identification Numbers (ITINs)

 

Extended unemployment compensation

  • An additional $300 per week through March 14, 2021 for those receiving unemployment benefits
  • Extends the Pandemic Unemployment Assistance (PUA) covering:
    • Self-employed
    • Gig workers
    • Other non-traditional workers
  • Pandemic Emergency Unemployment Compensation (PEUC) program which provides extra weeks of unemployment after state benefits are exhausted
  • Increases allowed time to collect regular state unemployment, PEUC, and PUA to 50 weeks
  • Provides extra $100/week for certain workers with both a job and self-employment (SE) income but their base for unemployment benefits doesn’t include SE income

 

New considerations for EITC taxpayers with lookback provision

  • Special “lookback” for EITC and Child Tax Credit (CTC)
    • Allows taxpayers to use 2019 earned income amount to determine eligibility for 2020 EITC and Additional Child Tax Credit (ACTC)
    • Allows taxpayer to pick the more tax beneficial income year and use that to compute 2020 EITC and CTC

 

A host of other provisions are embedded in the very comprehensive bill including future changes to the Extender tax provisions, small business provisions, charitable donation provisions and many more. You can read the entire bill here. We’ll continue to monitor for updates on how the IRS will implement many key elements of this legislation.

Got questions? Book an appointment with a Jackson Hewitt Tax Pro and they’ll be happy to help.

 

 

About the Author

Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

More about Mark Steber Our Editorial Policy

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