Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More
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I’m posting for the actual financial ramifications to each one of us. If any of the details mentioned in the post are wrong, please correct in the comments below, preferably with the source.
The US Senate agreed to a bipartisan $2 trillion stimulus deal. It just passed the House on 4/27 and President Trump is expected to sign it quickly.
Direct Link to stimulus Senate bill (pdf)
[This article has been updated many times. Last update 3/27/20 at 12:05 pm ET.]
$1,200 Checks
The part that people are most interested in that the government will mailing out checks of $1,200 to most US residents.
Individuals (non-dependent) will get between $1,200; couples get $2,400 (total)
Additionally, you’ll get $500 per child age 16 and under. For example, a couple with two children can get up to $3,400. There’s no limit on how much a large family can get. For example, a couple with five children will get $4,900.
Calculator from the Washington Post here.
Adult dependents are not eligible. Sounds like neither the dependent or the ‘caregiver’ will get a check for an adult dependent.
Even those who didn’t earn anything and those on Social Security will get these payments. In the event of someone who never filed a tax return it might be hard for the government to find you, though.
The only exception is those who earn more than $99,000 per year ($198,000 for a couple) who will not get anything. “Income” is defined as AGI, adjusted gross income.
There’s a phase-out from $75,000 – $99,999 where you’ll get a smaller check. (math calculation here)
The $75,000 threshold = $150,000 for a couple filing jointly ($112,500 for a head-of-household). Note those with children has a higher phase-out level and will still get some smaller amount even above the $75,000/$150,000 threshold. I don’t know what the exact math is, you can consult this calculator.
Green card holders/permanent residents (“resident aliens”) will receive the stimulus checks. I don’t know if US Citizens living abroad will get this payment.
The government will use your 2019 tax return to decide if you are eligible. They will only go to your 2018 tax return if you have not filed in 2019. They, reportedly, will NOT claw back if it turns out you made more in 2020 than in 2019/2018. They WILL pay you back if you end up making less in 2020 – they’ll reimburse you based on your 2020 income. (More discussion in this dedicated post.)
This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.
The stimulus money will go to wherever your last federal tax refund went; if you got a check you’ll get a check, if you got a direct deposit (authorized after January 1, 2018) it’ll be sent to that bank. Those getting electronic payments can see them within weeks while those getting checks will take longer. They are also considering sending out prepaid debit cards instead of checks. They government will also send out letters to your address indicating that they’ve sent out a payment. You can change your address using this form (though it’ll take a number of weeks to process).Additional Details
Adult dependents are not eligible. Neither the dependent nor the ‘caregiver’ will get a check for an adult dependent.
Those age 17 and up can get their own stimulus check if they are not claimed as a dependent by someone else. (If they file their own tax return, the government will know about them and send them a check. You can file a return even with $0 income.)
Those with children has a higher phase-out level with an extra $10,000 per child, e.g. couple with 2 children phase out to $0 at the $218,000 income mark. You can consult this calculator to do the math for your own situation.
Even those who didn’t earn anything and those on Social Security will get these payments. In the event of someone who never filed a tax return it might be hard for the government to find you, though.
Green card holders/permanent residents (“resident aliens”) will receive the stimulus checks.
US Citizens living abroad will also get this payment, according to reports I’ve seen.
The government will use your 2019 tax return to decide if you are eligible. They will only go to your 2018 tax return if you have not filed in 2019. They, reportedly, will NOT claw back if it turns out you made more in 2020 than in 2019/2018. They WILL pay you back if you end up making less in 2020 – they’ll reimburse you based on your 2020 income. (More discussion in this dedicated post.)
The stimulus money will go to wherever your last federal tax refund went; if you got a check you’ll get a check, if you got a direct deposit (authorized after January 1, 2018) it’ll be sent to that bank. Those getting electronic payments can see them within weeks while those getting checks will take longer. They are also considering sending out prepaid debit cards instead of checks. They government will also send out letters to your address indicating that they’ve sent out a payment.
You can change your address using this form, though it’ll take a number of weeks to process. You can also try calling the IRS at 800-829-1040, M – F, 7 a.m. – 7 p.m. to try changing your direct deposit info.
There’s also supposed to be a web portal that’ll go live eventually where people can add their direct deposit info if they don’t already have it on file.Unemployment Benefits
Another big component is the expansion of unemployment benefits. The increased benefits include:
Provides enhanced unemployment benefits through July 31, 2020. This increases your unemployment check by $600/week, on top of what the state regularly gives, for 4 months.
Someone can potentially get their full salary amount after being fired, with no ‘pay cut’, depending on what your salary was.
Extends unemployment 13 weeks longer than usual rules. Most states offer 26 weeks, and that will now be 39 weeks. This continues through December 31, 2020.
Extends unemployment to self-employed workers as well. That would include gig workers like Uber drivers. (I assume these workers will file for unemployment through the regular state unemployment website/office, but I’m not certain of this.)
Extends unemployment to furloughed employees as well. The added goal here is that businesses should not fire employees, instead leave them on as furloughed.Some other enhancements to unemployment coverage with the new bill:
The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
Part time workers who are laid off are now eligible for unemployment.
Those who did not work long enough and are laid off are eligible as well.
Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.Workers who are receiving paid sick leave or paid family leave would not be covered. People looking for a job who can’t find one are not covered either; it only covers those who have a job which they lost or which they temporarily can’t do their job.
Other Enhancements
Some other enhancements to unemployment coverage with the new bill:
The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
Part time workers who are laid off are now eligible for unemployment.
Those who did not work long enough and are laid off are eligible as well.
Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.Workers who are receiving paid sick leave or paid family leave would not be covered. People looking for a job who can’t find one are not covered either; it only covers those who have a job which they lost or which they temporarily can’t do their job.
Business Benefits
Small business loans: This fund is for loans of up to $10M to companies of 500 employees or fewer. Businesses who pledge to keep their workers can take a loan from the government, with the eventual forgiveness of the loan if they continue to pay their employees. I’m sketchy on the details here, but it sounds like you can get forgiveness on the loan for 8 weeks worth of payroll, utilities, mortgage interest, and rent costs. (I think ‘payroll’ means the payroll taxes, not the employee payments, but I’m not entirely certain.)
Payroll tax reimbursement: Business affected by Covid-19 will get 50% of their payroll taxes paid back on up to $10,000 in wages paid during the crisis.
Payroll tax deferment: Payroll taxes for 2020 can be deferred and paid half by December 31, 2021 and half by December 31, 2022.
A bunch of other things I don’t fully understand so I won’t write about.$2T List
Here’s a partial break-down of the $2 trillion, as best as I could find:
$250B for direct payments/checks to individuals and families. (see above)
$367B for small business loans. (see above)
$250B to boost unemployment insurance benefits. (see above)
$500B in loans for distressed companies. $75B of this is earmarked for airlines and travel.
$130B in funding for hospitals and medical equipment.
$150B in funding for state and local governments.Miscellaneous
Allows up to $300 of charitable contribution deductions for those who do not itemize who usually can not take a charitable deduction. This could be a nice little savings for a lot of people. The way this new rule was worded implies that this is not only for 2020 but will be a permanent feature of the tax code for the coming years. Charity donations since January 1, 2020 will qualify for this deduction. (Donations must be made directly to a charity, not to a donor-advised fund. I’m uncertain if stock/property donations work for this or if it’s limited to cash donations.)
A less relevant change is that, for 2020, those who itemize can get up to 100% of your income deducted through charitable donations; typically the limit is 50%.
Most federal student loans borrowers will have payments and interest deferred until September 30. (Also, for popular loan forgiveness programs, like PSLF, borrowers will get credit for payments during deferment period.)
Certain coronavirus-related costs can be withdrawn from retirement fund without 10% early withdrawal penalty, up to $100,000. You can also borrow up to $100,000 from your 401k for reasons related to the pandemic.
Those at an age who are required to take a minimum distribution from their retirement account will not have to do so this year.
Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred PaymentsInformation is still breaking, I tried my best to break it down in this post. Please add anything missing or corrections in the comments below.
Source and Credit to: DoC
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I’ve heard that the $600 - $1,200 individual “checks” will automatically be distributed via direct deposit if you’ve received federal tax refunds via direct deposit. Let’s hope those accounts are still active//in good standing.
ETA: student loan bills (interest and principal) will be suspended for 2 months
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So for small businesses all they get is a loan? A lot of them had to shut down with the rents still being due. So lets say they get the loan to pay the rent while making $0, and if and when they reopen, they have to pay back the loan (is it interest free?) out of their already thin profits. I see a lot of small business closures in the future.
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2 Replies
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dangeRuss, it’s not a perfect solution, but it will help. For example, when my husband and I get the checks (we’re struggling on SS), we plan to spend some of it for things we haven’t been able to afford. One will be to get the driveway graveled, which it hasn’t been for several years and is a muddy track. That will pass some money on to a local gravel company which will be able to pay for gas and a driver to bring the gravel to us. We plan to spend some to hire a small-job carpenter to fix the shed double doors and to build a cover over that part of the shed. So that much of the money will help the carpenter pay for gas and food and rent or mortgage. When the average person spends the money, it will put it back into circulation, and those that receive it will spend it too, rinse, repeat. When Big Business gets the money, they use it to buy back stock and pay bonuses to top-level executives, taking the money out of circulation (well, except for luxury car manufacturers, high-end resorts and hotels, vacations at exclusive locations, designer bespoke clothes, etc.)
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@dangeruss said in US Stimulus: Government To Mail Out $600-$1,200 Checks To Most US Residents; Unemployment Expansion & More:
So for small businesses all they get is a loan? A lot of them had to shut down with the rents still being due. So lets say they get the loan to pay the rent while making $0, and if and when they reopen, they have to pay back the loan (is it interest free?) out of their already thin profits. I see a lot of small business closures in the future.
Actually, the deal includes loan forgiveness for small businesses that keep their employees on the payroll.
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@dionaea That’s assuming that the gravel company is still working. Under lockdown, all nonessential businesses have had to close, and I’m not sure gravel falls under essential.
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@dangeruss re: Small Business Loans
The Small Business Administration’s 7(a) loan program is expanded more than tenfold. The legislation authorizes $349 billion in lending from February 15th to June 30th for businesses with fewer than 500 employees. Recipients could receive up to $10 million of 250% of their monthly payroll costs and would be expected to use the funds to retain workers, maintain payroll, and continue to pay monthly expenses.Recipients of these loans could also apply for loan forgiveness that would forgive an amount up to eight weeks of payroll and other fixed expenses such as rent and utilities.
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@fivetalents said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
I’ve heard that the $600 - $1,200 individual “checks” will automatically be distributed via direct deposit if you’ve received federal tax refunds via direct deposit. Let’s hope those accounts are still active//in good standing.
ETA: student loan bills (interest and principal) will be suspended for 2 months
In an earliet draft of the bill it was $600 - $1,200 checks, but in the draft that passed the check amount is $1,200 (no more $600 checks). The only exception is those who earn more than $99,000 per year ($198,000 for a couple) who will not get anything. “Income” is defined as AGI, adjusted gross income. There’s a phase-out from $75,000 – $99,999 where you’ll get a smaller check.
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Will they tax us on the $1,200 ?
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@ctgolfer said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
Will they tax us on the $1,200 ?
The $1,200 checks are treated as a refundable tax credit and thus not considered taxable income.
I know it was a lot to read in the OP, but it did talk about that under the “$1,200 Checks” section towards the end:
This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.
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@mrvietnam said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
@ctgolfer said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
Will they tax us on the $1,200 ?
I know it was a lot to read in the OP, but it did talk about that under the “$1,200 Checks” section towards the end:
This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.
Thanks MrVietnam, I did miss that. Blurry eyed buzz happening right now. Some good stuff I be smokin’.
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Thanks OP.
I do want to note that there are some adults who will not receive a check: dependents. Mostly younger adults (college kids, for example) and elderly parents who are dependent upon their children.
There are also some ‘donut hole’ children who won’t qualify for the $500 check most likely. I have a son who was 17 last year and turns 18 this year - the 2018 tax act redefined children (for Child Tax Credit purposes, which is what it appears will be used to define children for stimulus payments) as those 16 and younger. As such, he probably will not qualify for a $500 stimulus credit.
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@orthros said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
Thanks OP.
I do want to note that there are some adults who will not receive a check: dependents. Mostly younger adults (college kids, for example) and elderly parents who are dependent upon their children.
There are also some ‘donut hole’ children who won’t qualify for the $500 check most likely. I have a son who was 17 last year and turns 18 this year - the 2018 tax act redefined children (for Child Tax Credit purposes, which is what it appears will be used to define children for stimulus payments) as those 16 and younger. As such, he probably will not qualify for a $500 stimulus credit.
Thanks for those clarifications.
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The IRS plans to add a link on their website soon that will allow anyone, who hasn’t already done so, to submit their bank account info (so they can receive their stimulus checks via direct deposit instead of postal mail).
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@dangeruss said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:
@dionaea That’s assuming that the gravel company is still working. Under lockdown, all nonessential businesses have had to close, and I’m not sure gravel falls under essential.
dangeruss, I wasn’t talking about getting gravel while this mess is ongoing. Gravel is definitely not an essential item unless your home was destroyed at the time the tornadoes came through and you’re trying to rebuild. I’m saying that once it is safe (whenever that will be), we will try to aid some of the small local businesses here, including a local gravel company. Sorry I wasn’t clear before.
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The IRS anticipates distributing $1,200 stimulus checks via direct deposit (to those with bank accounts already on file) between April 9th - 14th. Paper checks start going out April 24th but could take up to 5 months. The portal to submit bank info for direct deposit is not expected to launch for at least a month.
Their economic impact payments updates website is out of date, but here’s the link:
General: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
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I should start a pool. I’d give amazing odds against those direct deposits hitting by April 9th. Like 50 to 1 at least.
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I know unemployment rules may be different for each state. I am in California. The following are some of the weekly questions it asks me in order to certify for unemployment benefits are the following:
- Were you too sick or injured to work?
- Was there any reason (other than sickness or injury) that you could not have accepted full-time work each workday?
- Did you look for work?
- Did you refuse any work?
I wonder during a pandemic if the requirement to actively be looking for work is waived? I am employed by the public schools here and I have a job to come back to once the schools are allowed to reopen. I wonder for question 2 if they consider a pandemic a reason why I could not have accepted full-time work. I sent an online message asking these questions to the EDD, but now 8 days later I have still not received a reply.
Anyone else in CA getting unemployment? How did you answer the weekly certification questions? Are you actively looking for work?
By the way, regarding the federal stimulus money, I read on several online news sites that they will start direct depositing that money next week by April 15th.
https://www.foxnews.com/politics/most-americans-receive-coronavirus-checks-april-15
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@mrvietnam said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
I know unemployment rules may be different for each state. I am in California. The following are some of the weekly questions it asks me in order to certify for unemployment benefits are the following:
- Were you too sick or injured to work?
- Was there any reason (other than sickness or injury) that you could not have accepted full-time work each workday?
- Did you look for work?
- Did you refuse any work?
i wonder during a pandemic if the requirement to actively be looking for work is waived?
You can quit you job because of the virus and you can still collect so just answer the questions as if you were active in searching. (or at least that’s what I would do)
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@orthros said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
I should start a pool. I’d give amazing odds against those direct deposits hitting by April 9th. Like 50 to 1 at least.
The first round of stimulus checks went out on April 11th via direct deposit.
@MrVietnam I heard that weekly unemployment check-ins were supposed to be waived amidst COVID-19 social distancing. I’d thoroughly check your state’s unemployment website again for an update now that a ton of more people are probably asking this question since benefits kicked in more than a week ago… or call in if you can take the long wait times.
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@fivetalents said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
@orthros said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
I should start a pool. I’d give amazing odds against those direct deposits hitting by April 9th. Like 50 to 1 at least.
The first round of stimulus checks went ob April 11th via direct deposit.
@MrVietnam I heard that weekly unemployment check-ins were supposed to be waived amidst COVID-19 social distancing. I’d thoroughly check your state’s unemployment website again for an update now that a ton of more people are probably asking this question since benefits kicked in more than a week ago… or call in if you can take the long wait times.
I don’t think I will call in as there are 8 hour wait times from what I have read.
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Get Your Refund Faster: Tell IRS to Direct Deposit your Refund to One, Two, or Three Accounts
https://www.irs.gov/refunds/get-your-refund-faster-tell-irs-to-direct-deposit-your-refund-to-one-two-or-three-accounts
Non-Filers: Enter Payment Info Here: I think under $12,200 in 2019
https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here
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It’s live! You can now check the status of your payment in one place…
Manual path: https://www.irs.gov/ —>>> Get Info on Economic Impact Payments —>>> Get My Payment
Use the “Get My Payment” application (coming mid-April) to:
- Check your payment status
- Confirm your payment type: direct deposit or check
- Enter your bank account information for direct deposit if we don’t have your direct deposit information and we haven’t sent your payment yet
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Spoke with someone who’d received her check via direct deposit.
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I got my stimulus money via direct deposit this morning: $3,400 (amount for me, my wife, and 2 children)
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After approving 1.5 million stimulus loans totaling over $315 billion, the small business Paycheck Protection Program is set to run out of money this morning:
https://www.nytimes.com/2020/04/15/us/politics/coronavirus-small-business-program.html
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Not to worry, the printing press runs 24/7 until the wheels fall off.
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@fivetalents said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
After approving 1.5 million stimulus loans totaling over $315 billion, the small business Paycheck Protection Program is set to run out of money this morning:
https://www.nytimes.com/2020/04/15/us/politics/coronavirus-small-business-program.html
I like the spin the New York Times puts on it: “Lawmakers remain at odds how to replenish a lending program… “ The Republicans want to add more money, but the Democrats are blocking it.
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- The senate just passed a new COVID-19 relief bill. The $484 billion package heads to the house next for a vote on Thursday and currently includes:
- $10B - economic grants for for small businesses
- $60B - small lenders//banks
- $100B - hospitals and COVID-19 testing
- $310B - Paycheck Protection Program (PPP) loans
- As of April 16, the “Small Business” Administration (SBA) approved 4,412 loans of $5M or more to businesses that typically have millions in cash on hand. Large chunks of the quickly depleted original small business relief funds were given to chain restaurants, hotels, and publicly traded medium/large corporations like:
- J. Alexander’s ($15.1M)
- Potbelly ($10M)
- Ruth’s Chris($20M)
- Shake Shack ($10M), voluntarily returned
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Small Business Administration left ALL private APPLICATION data (not just those approved) from the 1st round off small business loans exposed. “Personal information may have included names, Social Security numbers, addresses, birth dates, email addresses, phone numbers, citizenship status and insurance information.” The nearly 8K potentially affected businesses were notified and offered a free year of credit monitoring. This may have been limited to the Economic Injury Disaster Loan program (EIDL).
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There’s the beginnings of murmurings from congress about a proposal for another round of stimulus checks to help individuals cover rent/essential needs in May.
- The senate just passed a new COVID-19 relief bill. The $484 billion package heads to the house next for a vote on Thursday and currently includes:
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@fivetalents said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
Small Business Administration left ALL private APPLICATION data (not just those approved) from the 1st round off small business loans exposed. Personal information may have included names, Social Security numbers, addresses, birth dates, email addresses, phone numbers, citizenship status and insurance information." The nearly 8K potentially affected businesses were notified and offered a free year of credit monitoring. This may have been limited to the Economic Injury Disaster Loan program (EIDL).
Good thing I never applied. I’m still not sure if PhatWallet would be eligible for the loan and whether we’d have to pay it back.
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The $484 billion relief package is expected to be signed/made official as soon as today. However, banks warn that the $310B for Paycheck Protection Program (PPP) loans is probably already spoken for since thousands of applications have already been approved. but weren’t funded before the program ran out of money last week.
Treasury Secretary is warning big companies that were funded through the program to return the money by May 7th or face “consequences.” That could free up over $22B if all of the 4,412 companies that got $5M+ loans comply (even more if loans of $1M+, 45% of all loans, totaling $152.4B are returned)
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There are already documented reports of people who theoretically don’t qualify for stimulus checks getting them. I say ‘theoretically’ because the bill is 880 pages long and written in lawyer-speak, so if any of you brianiacs can dive in and tell me if children should be getting their own stimulus checks - $1,200 checks, not the $500 credited to their parents - let me know.
I finally have helped my Depression-era parents set up direct deposit for their checks since they need to stay the hell home and their local bank is shut down indefinitely anyways.
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White House economic adviser Larry Kudlow signaled Friday that formal negotiations on a fourth coronavirus stimulus package would be paused until early June. This bill is being pushed by a few Democrats in the Senate, but I highly doubt it will ever become law (at least in that form):
https://www.the-sun.com/news/801005/democratic-senators-2000-monthly-coronavirus-payment/
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Did the letters say the actual amount one would receive? i.e. if one was only getting $900 did the letter say $900 or did all the letters say $1200 regardless of the amount received?
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@my4mainecoons said in Stimulus: Government To Send Out $1,200 Checks/Direct Deposits To Most US Residents; Expanded Unemployment & More:
Did the letters say the actual amount one would receive? i.e. if one was only getting $900 did the letter say $900 or did all the letters say $1200 regardless of the amount received?
The letter for me said the amount my family would receive ($3,400) and I was the only person in my household to receive the letter. They actually direct deposited the money 10-14 days before I received the letter.
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thanks. I need to check my acct but letter made it sound like I’m receiving more than I thought I’d get.
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The president signed into law today a bipartisan congressional bill which enhances the Payroll Protection Program (PPP) forgiveness program by tripling the time for wage loan forgiveness and increasing the amount of non-wage expenses which can be forgiven, among other things.
A few key elements of the bill:
Previously you could only get loan forgiveness for 2 months of payroll and other expenses. Now, they’ve increased that to 6 months, tripling the amount of loan forgiveness possible with the program.
Note, total loan amount that each business is eligible has not changed, and you obviously can’t get forgiven more funds than the full amount of the loan. A lot of businesses were not able to use all the loan funds within 2 months on eligible expenses, and this change gives them three times the amount of time to do so.
Final date to use funds and get loan forgiveness is December 31, 2020. Thus, any PPP loan money received in July will not get the full 6 months to use the money. But any loans received by the end of June will have a full 6 months from receipt to use the money.
Previously you could only get forgiveness if you used 25% or less on non-payroll expenses. Now they’ve changed that, and you can use up to 40% on non-payroll expenses.
For example, suppose you want forgiveness for two employees payroll and for your rent cost. Your rent cost is $40,000 over the course of 6 months and your employee cost is $60,000 over the course of 6 months. Previously, you would only be eligible for $75,000 of forgiveness whereas now you’ll be eligible for the full $100,000 of forgiveness.
You can rehire workers anytime before the end of 2020 and still be eligible for loan forgiveness; previously the deadline was June 30.
This is huge since a lot of businesses don’t have much work now and have fired/furloughed their employees (and put them on unemployment) until things pick up. With this new measure, a lot of businesses will be able to bring back their workers, say, in two months, and still be eligible for loan forgiveness.
Just keep in mind, all money spent to get loan forgiveness must be completed by end of year, so if you bring your employees back in December, you’ll only end up getting 1 month of forgiveness.
The new law also eases some of the rehiring requirements for certain instances where the business was unable to rehire workers.
Separately, the new law also extends out the loan time for the parts which are not forgiven from 2 years to 5 years at the same 1% interest.Disclaimer: Please do your own research. It’s possible some of this information isn’t written with perfect accuracy. Just trying to convey some basic ideas here.
Also worth noting a negative element of the bill which is that you mess up and don’t spend at least 60% on payroll, you get no forgiveness at all. (Previously, you were still eligible for partial forgiveness if you spent less than 75% on payroll.)
When the CARES Act initially passed, I wrote an article evaluating the different options. This change makes the PPP option much more enticing for many people, and some of the analysis given there will change with the new legislation. PPP money is still available, so you can still apply now and get full benefit.
Source: DofC
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The senate extended the deadline for the small business PPP from June 30th to Aug 8th ($130 billion is unclaimed).
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Many Americans might not get another stimulus check. Here’s where things stand on another COVID-19 bill
