Sunday, March 7, 2021

This is What is in the COVID-19 $1.9 Trillion Spending Bill That Was Passed by the Senate on Saturday and What You Will Get Out of It

The Senate passed President Biden’s $1.9 trillion coronavirus spending package Saturday along party lines, 50-49.

The package now heads back to the House, which must approve the Senate-revised legislation before sending it to the White House for Biden’s signature. 

House Democrats appear on track to approve the Senate's changes. House Majority Leader Steny Hoyer (D-Md.) said the House would take it up Tuesday.

The legislation provides $300 in weekly unemployment benefits through Sept. 6, sends $1,400 direct payments to most Americans, direct $350 billion to state and local governments, funds vaccine distribution and expands the child tax credit, among other items.

It should be pointed out that the federal government has no funds to finance this spending. 

No doubt the Federal Reserve will step in to monetize most of the spending. Indeed, the Treasury already has $1.4 trillion chit sitting at the Federal Reserve that the Treasury can pump into the economy as dollars at any time. Count that as Fed monetization.

This explosion of new money will add to the upward pressure now developing on prices.

The unfunded spending spree is the most irresponsible thing coming out of the Federal Reserve, the Treasury, Capitol Hill and the White House in many decades.

Here is the breakdown as to how much of the money pump will come your way:

Who is eligible?

  • Generally, if you are a U.S. citizen or resident alien, and you are not claimed as a dependent on someone else’s income tax return, you are eligible to receive a payment if you fall within the relevant income thresholds.
  • If you file your taxes as an individual and your annual income is $75,000 or less, you are eligible for a full payment of $1,400. If you earn between $75,000 and $80,000, you are eligible for a reduced payment.
    • For married couples who file joint returns, you are eligible for a full payment of $2,800 if your joint annual income is $150,000 or less. If you earn between $150,000 and $160,000, you are eligible for a reduced payment. These amounts will differ if you have children and/or adult dependents; see below for more details.
    • If you are a single parent or caretaker and you file as a head of household, you are eligible for a full payment if your annual income is $112,500 or less, and a reduced payment if you earn between $112,500 and $120,000. Your payment amount will depend on how many dependents you have.
  • If the credit amount determined by your 2021 tax return exceeds the payment amount you received (which will be based on your 2020 or 2019 tax return), you can claim the difference on your 2021 tax return. If, on the other hand, you receive a larger payment than the maximum credit allowed based on your 2021 tax return information, you will not be required to repay any amount.
  • In general, taxpayers without an eligible Social Security Number are not eligible for the payment. However, married taxpayers filing jointly where one spouse has a Social Security Number and one spouse does not are eligible for a payment of $1,400, in addition to $1,400 per dependent with a Social Security Number.
    • For eligible households in which at least one spouse is a member of the U.S. Armed Forces (and at least one spouse includes their Social Security Number on the tax return), the couple may receive up to the full $2,800.

Amount of payment

  • The payment is $1,400 per eligible family member: $1,400 per taxpayer ($2,800 for married couples filing jointly), and an additional $1,400 per dependent, including both children and non-child dependents.  An eligible family of four will receive up to $5,600.
  • Payments start to phase out for those with incomes exceeding $75,000 for singles; $150,000 for married couples; and $112,500 for single head-of-household filers. Your income is based on your 2020 or 2019 tax return, whichever is the latest on file with the IRS.
  • If your income exceeds the phase-out threshold, your credit amount will be reduced proportional to your income in excess of the phase-out threshold, divided by $5,000 (individual), $10,000 (married couple), or $7,500 (single head-of-household). So, if you are a single filer earning $78,000: $1,400 * (1-(($78,000-$75,000)/$5,000)) = $560
  • No payments will go to: single filers earning more than $80,000; joint filers earning more than $160,000; and single head-of-household filers earning more than $120,000.


1 comment:

  1. So a family with three or four kids gets enough money to buy a car. when in history has anything like this happened this is crazy