The coronavirus pandemic changed the face of the world and impacted individuals, families, and businesses alike. Many struggled with job loss and businesses across industries were forced to close or operate at a significantly reduced capacity, putting a dent in their profits and bottom lines. If you, as an individual or a business owner, have been affected by the pandemic, it’s important to know that the U.S. government is offering a number of benefits and relief packages to help citizens.
On March 27, 2020, federal lawmakers enacted a $2 trillion economic stimulus package that ensured that most Americans would receive checks of up to $1,200. The goal of the legislation was to put money directly in the pockets of American families struggling with the economic consequences of the coronavirus pandemic.
All US tax residents with social security numbers and an income under a specific threshold are eligible for the stimulus check, regardless of where they currently reside. Single adults, who reported adjusted gross income of $75,000 or less on their 2019 tax returns received a one-time check for $1,200. Married couples, who filed jointly, received $2,400, and families were issued an additional $500 for each child under 17. Individuals, who are collecting Social Security benefits for retirement, disability, or Supplemental Security Income (SSI) are also eligible for the stimulus payments.
The amount of the stimulus checks depends on the income over the last year. For the first stimulus check, the amount was determined based on the 2019 income (if already filed at the time) or 2018 if not. Following the first stimulus check, a second one was issued, and a third one was signed into power on March 11, 2021.
As an American citizen, you don’t need to do anything to get the stimulus check. Most people got their first and second stimulus payments automatically, but IRS errors resulted in some people missing out on theirs. According to the IRS, if you are eligible but didn’t receive the first or second stimulus payment, you may be able to claim the 2020 Tax Rebate Claim. You will also need to file a 2020 tax return even if you don’t usually file. You can also claim the money if you did receive the first or second check, but you were missing money for any dependants or received only a portion of the full amount you were owed. The full amount for the first stimulus was up to $1,200 and for the second: up to $600.
American taxpayers were also given a number of short-term and long-term tax breaks to mitigate some of the economic fallout from the COVID-19 pandemic. The biggest change was the postponement of the April 15 filing and payment deadline for any affected taxpayers (defined as any “individual, a trust, estate, partnership, association, company or corporation” who had a federal income tax return or income tax payment due on April 15). Under Notice 2020-18, no interest, penalty, or addition to tax was accrued between April 15, 2020, and July 15, 2020.
In 2021, businesses can also take advantage of the employee retention credit available for any organization financially impacted by COVID-19. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), originally enacted on March 27, 2020, provides a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an employer pays to their employees.
Self-employed individuals can also receive a refundable credit against income tax for any qualified family leave equivalent amounts. Sec. 1402 defines self-employed individuals as someone who regularly carries on any trade and business and as such, would be entitled to paid leave under the Emergency Family and Medical Leave Expansion Act if they were an employee.
If you’re a business owner, navigating the complex legislation surrounding tax breaks and business benefits might be a daunting task. As an individual, you might also be eligible for a number of relief schemes in relation to the economic impact of the coronavirus pandemic. As such, it’s always helpful to work with an accountant. They can help prepare your taxes and file them (a condition if you want to take advantage of the Tax Rebate Claim), as well as advise you on different ways you can minimize your taxes or receive financial support during the COVID-19 pandemic.