This new legislation could be part of the now-developing Phase 4 coronavirus relief measure expected to be considered in late April.
Young adults fell through the cracks in the Coronavirus Aid, Relief and Economic Security (CARES) Act. That new law created the COVID-19 relief payments that the Internal Revenue Service says it will begin processing this week.
It will send checks of up to $1,200 to single taxpayers, $2,400 to married couple who file a joint return, plus $500 per child for families with dependent children. But only some dependent children.
Two U.S. Senators, however, are working to change that.
Dependent vs. qualifying children: Just who is a dependent child? Good question, especially when it comes to taxes.
The tax code has long had competing definitions of dependent children, or more precisely qualifying children, and that's posing a problem with these relief payments.
The primary definition of a dependent child says, among other things, that he or she is younger than 19 at the end of the year.
But that definition makes an exception for a youth who is a full-time student younger than 24 and who also meets the other requirements — primarily the one where parents provide more than half the student's support — even if the young person lives mostly at college.
And Congress, especially when it's juggling budget numbers of various tax breaks, likes to fiddle with the ages when it comes to a qualifying dependent. For example, a dependent child qualifies to be claimed by parents for Child Tax Credit purposes only if the youngster is age 16 or younger.
That same younger-than-17 age limit is what the House and Senate agreed to when it came up with the coronavirus relief payments of $500 for each dependent child. Or more precisely, each qualifying dependent child.
That means that a lot of college kids and their families who are still supporting them are not going to get the added $500 COVID-19 relief money.
Adding college kids: Michigan's two U.S. Senators think that's unfair, so they've come up with legislation that would make the COVID-19 relief payments more widely available.
The All Dependents Count Act, introduced on April 4 by Sens. Debbie Stabenow and Gary Peters, expand the additional $500 payments to dependents older than age 16, as well as to other adult dependents claimed by taxpayers. These non-child dependents generally are those who qualify for the $500 other dependents' credit created by the Tax Cuts and Jobs Act (TCJA).
"Congress came together and passed funding for workers, families, health care providers and small businesses during this coronavirus crisis," said Stabenow in announcing the bill. "Most Michigan residents will be receiving direct payments, but the law left behind 17- and 18-year-olds, college students and other dependent adults. This is unfair to these people as well as their parents and caregivers. This new bill will make sure taxpayers receive the $500 payment for all their dependents."
Peters echoed the reasons for the expanded payments.
"Michiganders are going through incredible hardships during this pandemic," Peters said. "We need to work to ensure that families — including those with dependents — have more relief and support available to them. I'm pleased to cosponsor this bill, which will ensure adults that have dependents they care for — including 17- and-18-year-olds, college students and those who are disabled — receive the much-needed support to help them get through this crisis."
Part of future COVID-19 bills: Don't look for the Stabenow-Peters bill to move independently. Rather, if it gets any consideration, it likely will be as part of the next coronavirus relief package.
Yep, more federal help is on the way even though the new COVID-19 payments have yet to be delivered.
Lawmakers are publicly floating ideas — like the expanded dependents eligible for payments — for a fourth coronavirus relief bill.
The talks are in the early stages and reminiscent of the end-of-year Christmas tree bills where everyone tries to work in some help for their pet projects.
The House, led by Speaker Nancy Pelosi (D-California), is moving a bit more quickly in its working sessions. Senate Majority Leader Mitch McConnell (R-Kentucky), however, has indicated his chamber wants to give the current relief measures time to work and then look at potential next economic relief steps.
More money, for individuals and states: It's likely that more cash payments will be part of any future bill.
In addition to the overlooked groups covered in the Stabenow-Peters bill, many on Capitol Hill and beyond note that the current relief payments have another shortcoming. They aren't realistically enough to tide over folks who will be out of jobs for months.
Pelosi has said in recent interviews that the next stimulus package, dubbed Phase 4, "must go further in assisting small businesses including farmers, extending and strengthening unemployment benefits and giving families additional direct payments."
Other areas that also are likely to be discussed in a future recover package are aid to states and cities that are bearing the brunt of COVID-19 costs, as well as a variety of health care related relief.
The health topics include hazard pay for medical workers, as well as free, i.e., government payment for, treatment of those who contract the virus.
On the road repair road again: And an infrastructure proposal might finally see the legislative light of day.
Both Democratic and Republican lawmakers have talked about a substantial bill to deal with the country's deteriorating roads and bridges (insert your Infrastructure Week joke here), but the main sticking point has always been how to pay for it.
Such funding concerns appear to have been forgotten in this time of pandemic, so some infrastructure measures might be part of the next bill.
Look for talks on the fourth COVID-19 relief to shift into high gear. And be on the lookout for the current coronavirus payments, limited though they are.
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
You also might find these items of interest:
- Tax transcript tips for students filing a FAFSA
- COVID payments are on the way. So are related tax scams
- Treasury relents, will send COVID-19 payments automatically to eligible senior citizens