Considering more COVID-19 payments on Parents' Day
Sunday, July 26, 2020
Senate leaders and U.S. Treasury Secretary Steve Mnuchin promise they'll release next week the Republican response to the Democratic House's already approved next round of COVID-19 relief payments.
Until then, we're still speculating on what will be in the counter proposal. It's a safe bet, however, that it will contain a second round of direct payments. The first payments, created by the Coronavirus Aid, Relief and Economic Security (CARES) Act that became law in late March.
What's not clear, though, is who would qualify for this additional stimulus money.
Halfway OK'ed: On July 24, Senate Majority Leader Mitch McConnell (R-Kentucky) told reporters that Republicans in Upper Chamber "do envision another round of direct cash payments, particularly [for] those making $40,000 a year and less in the hospitality industry."
Any Senate proposal must be reconciled with the next round of COVID-19 economic impact payments approved in mid-May by the Democratically-controlled House. Under that bill, referred to as the HEROES Act instead of its longer official title (Health and Economic Recovery Omnibus Emergency Solutions Act), individuals who are eligible would get $1,200 for each, with another $1,200 available for up to three qualifying dependents. That comes to a potential maximum of $6,000.
The $6,000 figure is based on what we've come to call the traditional family arrangement. That's two parents living together with their children, specifically three minor children in the case of the HEROES Act.
Defining families: And while families have changed from what has been called, sometimes derisively, the "Leave it to Beaver" model pictured at the top of this post, government data shows that the traditional family still dominates.
U.S. Census Bureau research shows that around 70 percent of children across the country live in a home with two parents.
The next largest parent-child living arrangement is mom-only households. Children who live with just their fathers or, sadly, don't have any parents in their lives come in at around 4-to-5 percent.
Yay for all the 'rents: Since today is National Parents' Day, the 70 percent of homes with two adults caring for youngsters is this week's By the Numbers figure.
I want to make it clear that I'm not dissing other types of families. Single-parent homes, as well as those where grandparents are the ones responsible for taking care of kids, also work well for many. As long as all in the family love and support each other and they have the financial means to provide care, then it's all good.
But from just a numerical standpoint, I chose the largest statistical segment.
National Parents' Day was established in 1994 when President Bill Clinton signed Congressional Resolution 36 U.S.C. § 135 – Parents' Day into law. For less legalese, check out Clinton's proclamation of the first Parents' Day, which now rolls around each year on the fourth Sunday in July.
While this year's celebration might be muted as many families are struggling because of coronavirus economic difficulties, I salute all moms and dads and the surrogates who do all they can for their children and families.
And as we wait to see how and how much Uncle Sam will do to help out these families, here's an overview of the last COVID-19 economic impact payment rules.
Qualifying for original COVID-19 relief: For most people, the IRS used — or will use, since the payments will be issued through the end of 2020 — information from your 2019 or 2018 tax return or information to determine who qualifies this year for an economic impact payment.
To qualify for a payment, you must:
- Be a U.S. citizen or U.S. resident alien
- Not be claimed as a dependent on someone else's tax return
- Have a valid Social Security Number (SSN). Or if you or your spouse is a member of the military, only one of you needs a valid SSN
- Have an adjusted gross income below a certain amount that is based on your filing status and the number of qualifying children under the age of 17. If you are not required to file taxes because you have limited income, even if you have no income, you are still eligible for payment.
The table below spells out the requirements for the various parental filing statuses.
SINGLE OR |
HEAD OF HOUSEHOLD |
MARRIED |
You are eligible to receive the full payment if your adjusted gross income is below $75,000 and a reduced payment amount if it is more than $75,000 The adjusted gross income limit for a reduced payment is $99,000 if you don't have children and increases by $10,000 for each qualifying child under 17. |
You are eligible to receive the full payment if your adjusted gross income is below $112,500 and a reduced payment amount if it is more than $112,500. The adjusted gross income limit for a reduced payment is $136,500 if you don't have children and increases by $10,000 for each qualifying child under 17. |
You are eligible to receive the full payment if your adjusted gross income is below $150,00 and a reduced payment amount if it is above $150,000. The adjusted gross income limit for a reduced payment is $198,000 if you don't have children and increases by $10,000 for each qualifying child under 17. |
If your adjusted gross income is below $75,000, you'll receive the full $1,200. You will also receive $500 for each child under the age of 17 you claim on your taxes. |
If your adjusted gross income is below $112,500, you'll receive the full $1,200. You will also receive $500 for each child under the age of 17 you claim on your taxes. |
If your adjusted gross income is less than $150,000, you'll receive the full $2,400. You will also receive $500 for each child under the age of 17 you claim on your taxes. |
If your adjusted gross income is above $75,000, you'll receive an amount that will be reduced by $5 for every $100 in adjusted gross income above $75,000. |
If your adjusted gross income is above $112,500, you'll receive an amount that will be reduced by $5 for every $100 in adjusted gross income above $112,500. |
If your adjusted gross income is above $150,000, you'll receive an amount that will be reduced $5 for every $100 in adjusted gross income above $150,000. |
If your adjusted gross income is more than $99,000 and you don't claim any children under the age of 17, you won't receive an Economic Impact Payment. This limit will increase to $109,000 if you have one child, $119,00 if you have two children, and an additional $10,000 for each child after that. |
If your adjusted gross income is more than $136,500 and you don't claim any children under the age of 17, you won't receive an Economic Impact Payment. This limit will increase to $146,500 if you have one child, $156,500 if you have two children, and an additional $10,000 for each child after that. |
If your adjusted gross income is more than $198,000 and you don't claim any children under the age of 17, you won't receive an Economic Impact Payment. This limit will increase to $208,000 if you have one child, $218,000 if you have two children, and an additional $10,000 for each child after that. |
Another chance in 2020: Regardless of what happens with the next round of COVID-19 stimulus, remember that you might get a second chance at collecting the first payment or more of it in 2021.
The economic impact payment is an advance tax credit for the 2020 tax year. So if you don't get any of the original coronavirus relief by Dec. 31 or don't get the maximum possible amount based on your 2018 or 2019 tax return, you will be able to apply for any additional COVID credit relief based on your 2020 earnings and family circumstances when you file this year's tax return in next year.
You also might find these items of interest:
- Father's Day child tax credit tip, along with other tax breaks for all parents
- Summer day camp costs, even in coronavirus time, still eligible for a tax credit
- Expanded tax help in covering child care costs during coronavirus closure rules
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. |
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