Who Is Eligible For Coronavirus Federal Stimulus Funds: U.S. Taxpayers Domestic and Expats

Senate passed a large 2 trillion dollar stimulus bill. The package has not yet passed Congress to become law. Parts of the bill may still change. Part of the stimulus includes payments to US Taxpayers.

Who is eligible?

  • US Residents with social security numbers.
  • U.S. Expats.

How much will U.S. Taxpayers receive?

  • $1,200 per adult & $500 per child under the age of 17.
  • If you earned less than $75K for Single, you receive the full amount.
  • For married couples filing together it is doubled to $150K
  • The amount is reduced by $5 for every $100 exceeding $75K for Single.
  • Above the income limit as per below you receive 0.

Filling Status Income Threshold Limit

  • Single Less than $75,000 $99,000
  • Married Filing Jointly (MFJ) Less than $150,000 $198,000
  • Head of Household (HOH) Less than $112,500 $146,500

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What if my 2020 income will be substantially less than 2019?

The government will use 2019 tax return income to calculate payments and 2018 tax return income if 2019 is not yet available. If your 2020 income increases and you had received a smaller amount than the one you received, you will not have to pay it back.

Who is not eligible?

  • Anyone without a social security number.
  • Non-Resident Aliens.
  • Households do not receive money for adult dependents, such as elderly relatives or adult children with disabilities.

How do I apply for?

No need. The payments will be automatic for those who qualify. No need to call the IRS. See the special website the IRS created: https://www.irs.gov/coronavirus.

Will the stimulus money be taxable?

No. The stimulus money is not considered income.

How will I receive the credit?

If you have received a tax refund via direct deposit, the IRS will deposit to your bank account. If you did not receive a refund the IRS will send you a check to last known address. The quickest way to get this information would be to file your 2019 return soon to update your information.

When will I receive the money?

It is expected 3 weeks if the IRS sends direct deposits. Paper checks will inevitably take longer and even more for U.S. Expats.

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Benefits of Stimulus Bill for Businesses

Small Business / Paycheck Protection Program

  • Total allocation: Provides $284.5 billion to re-open the PPP for first and second-time borrowers. Program is extended until March 31, 2021. According Goldman Sachs.com.
  • New eligibility requirements for second draw loans:
    • Develops a process for a small business to receive a second PPP if the small business has fewer than 300 employees, has used or will use the full amount of their first PPP, and can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019
    • Requires small businesses to have been in operation on or before February 15, 2020
    • Expands PPP eligibility to qualifying 501(c)(6) nonprofits, destination marketing organizations, housing cooperatives, local newspapers, TV, and radio broadcasters
  • New eligible covered expenses: Expands list of eligible expenses to include covered operations (software, cloud computing, and other human resources and accounting needs); property damage costs due to public disturbances that occurred during 2020 that are not covered by insurance; covered supplier costs; and covered worker protection expenditures (PPE)
  • Covered period for forgiveness: Borrowers can elect a covered period ending at the point of the borrower’s choosing between 8 and 24 weeks after origination
  • Loan terms: In general, borrowers may receive a loan amount of up to 2.5x the average monthly payroll costs in the one year prior to the loan or the calendar year, capped at $2 million
    • Restaurants / hotels: Entities in industries assigned to NAICS code 72 (Accommodations and Food Services) may receive loans of up to 3.5x average monthly payroll costs
    • Seasonal borrowers: Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020
  • Loan forgiveness: Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period
    • 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply
    • Repeals the CARES Act provision that requires PPP borrowers to deduct their EIDL Advance from their PPP loan forgiveness amount
  • Simplified loan application and forgiveness: Creates a simplified PPP loan forgiveness application for loans under $150,000
  • Tax treatment: Clarifies that i) gross income does not include forgiven PPP loans, ii) otherwise allowable deductible expenses paid with a forgiven PPP loan are deductible and iii) other attributes of a borrower’s assets will not be reduced as a result of the loan forgiveness. Provides similar treatment for second draw PPP loans. Provides that employers who receive PPP loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds

Economic Injury Disaster Loan (EIDL) Program

  • Provides $20 billion for new EIDL grants for small businesses in low-income communities
  • Creates a process for existing EIDL Advance grantees that received less than $10,000 to reapply for the difference between what they received and the maximum EIDL Advance Grant of $10,000
  • Extends covered period for Emergency EIDL grants through December 31, 2021
  • Extends time for SBA to approve and disburse Emergency EIDL grants from 3 to 21 days

Direct Payments

  • $600 for individuals making up to $75,000 and $1,200 for couples making up to $150,000 in the 2019 tax year
  • Additional $600 payment for each child dependent of the above individuals

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.

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