Senate Reaches Historic Deal On $2T Coronavirus Economic Rescue Package

[cathy63]

So, what is "tax liability" for this purpose? For example my DD and SIL get Child Tax Credit and Earned Income Credit which completely eliminates their tax liability. Does this mean they don't get the $1200 each? Do they get $600 each? Crazy. People with families making $50K are exactly the types of people that need this money the most.

Tax liability probably means the number that's on line 16 of your 2019 1040. That's after the Child Tax Credit but before the Earned Income Credit.

If this is a refundable credit, it doesn't really matter though. You would get it even if you had no income and owed $0 tax. If it's a non-refundable credit, then it will show up on line 13b along with the Foreign Tax Credit, and it will not reduce your taxes below $0.

We need to see what is in the bill that actually passes and gets signed into law before we'll know for sure.

 

[brewer12345]

Hilarious. Everyone is already mentally spending the stimulus checks, yet this "agreed to" bill can't even get out of the Senate, let alone run the gauntlet in the House.

 

[cathy63]

These qualifiers are a joke.and almost impossible to prove..you're going to send your private medical records to the IRS.?

No, it'd probably be honor system, like deducting medical expenses or charitable contributions. But, you'd be expected to have receipts/records to prove it if audited.

If you have a 401(k), then I think your employer could require you to prove the hardship exemption before they'd give you your money. For an IRA, I can't see a broker requiring proof, and you just take your chances with an IRS audit. I'd like to think they'd have bigger fish to fry and wouldn't be going after low- to middle-income taxpayers for a measly $10K penalty, but who knows?

 

[jollystomper]

Hilarious. Everyone is already mentally spending the stimulus checks, yet this "agreed to" bill can't even get out of the Senate, let alone run the gauntlet in the House.

+1

I am looking at this as I looked at the bonus component of my compensation plan when I worked. I assume I will get nothing, and just keep living life.

 

[SecondCor521]

If this is a refundable credit, it doesn't really matter though. You would get it even if you had no income and owed $0 tax. If it's a non-refundable credit, then it will show up on line 13b along with the Foreign Tax Credit, and it will not reduce your taxes below $0.

The text of the bill they're voting on now (https://www.scribd.com/document/453273118/Cares-Act-Final-Text) indicates it is a refundable credit.

The text above also removes the $2,500 of qualifying income requirement.

 

[statsman]

Can someone please explain how a refundable credit would work?

 

[USGrant1962]

Can someone please explain how a refundable credit would work?

A tax credit a straight deduction from your tax owed. If you owe less than the credit (less than $1200 for a single in this case) and it is a "refundable" tax credit, the difference is rebated to you.

 

[SecondCor521]

Can someone please explain how a refundable credit would work?

"Refundable" credits are credits you get even if you don't have a net tax liability.

It would be just like you had an extra $1200 or whatever in federal income tax withholding.

("Nonrefundable" credits are credits that can reduce your tax liability to zero but not below zero. So they erase tax liability but can't be refunded to you if they're more than what you owe.)

 

[statsman]

"Refundable" credits are credits you get even if you don't have a net tax liability.

It would be just like you had an extra $1200 or whatever in federal income tax withholding.

("Nonrefundable" credits are credits that can reduce your tax liability to zero but not below zero. So they erase tax liability but can't be refunded to you if they're more than what you owe.)

That helps. Thanks.

Edit: Okay, maybe not. How does that tie into individuals/families receiving checks?

 

[socca]

It seems to me that using any prior years income to determine eligibility for payment is wrong. The need for money is determined by the fact that people are not making any money this year.

Yep. American politicians are assuming that folks with 2018 or 2019 AGI above the limit saved a substantial portion of that income. These savings are now available to help them get through the COVID-19 crisis. What about the folks for whom this assumption is false? Are these folks always grasshoppers who are (not) getting what they deserve - a stimulus check?

 

[Midpack]

Good summary detail of the bill that passed the Senate. I’d start a new thread, but it goes to the House now, so not a done deal?

https://apple.news/A7XwOnuPDT12C9PHvg0L6tw

 

[foxfirev5]

Hilarious. Everyone is already mentally spending the stimulus checks, yet this "agreed to" bill can't even get out of the Senate, let alone run the gauntlet in the House.

Certainly not spending the check but I am interested in the tax implications. It is another reason why I wait until December to take any withdrawals from my tIRA.

 

[CRLLS]

The Senate passed the bill this morning. Pelosi said yesterday that she would wait 24 hrs to bring it to a vote in the House. Guess that might be tomorrow if they don't want to make changes.

 

[ivinsfan]

Interesting situations for my household.
Me - already filed 2019 return. No taxes owed and no SS - so I expect zero.
DGF - already filed 2019 return. Has over 2500 SS, but only owed 973 taxes, so assume the check will be for 973.
Her son - no effective income for 2018, has over 2500 in 2019, but return not filed yet. His father claimed him in 2018, but can't in 2019, but his income over the limit. So due to lack of timeliness in filing in 2019, it sounds like no refund for him.

Does the above make sense?

As much sense as anything the government does. You dont know that DGF son won't get a refund when he files his taxes before the deadline.


Some people are deliberately suppressing income to get virtually free HI provided from the government. I don't see a valid reason for them to double dip.

 

[Cobra9777]

...Also, the original bill (here) had the stimulus payment coming as an advance payment of a one-time credit that will be included on your 2020 tax return. It looks like they were just using 2018 tax returns to figure out who would probably be eligible for the 2020 credit so they could distribute the money early. I'm guessing that hasn't changed in the final bill, so if you're entitled to the credit in 2020, then even if you don't receive it in advance because you were in a different situation in 2018, you should still be able to claim it when you file next year...

[bold is mine]

What about the opposite situation?... Let's say I get the full advance payment now based on low AGI in 2018 but would not qualify based on 2020 AGI. Do I have to give it back next year?

 

[Midpack]

Would we rather have had a decidedly partisan Congress take months to write a relief package that considered every possible situation for every single taxpayer, or get something done to help individuals and businesses ASAP that will fail very quickly if the economy tanks - which seems inevitable? And the last thing they should be worried about is financially independent retirees as some of these posts posit. Let’s keep the ship afloat and not worry about varnishing the woodwork now.

From a broad brush perspective I’m pleasantly surprised at what they did agree on this quickly (assuming it passes the House) for as relentlessly partisan as they ALL are!

We needed good NOW, not perfect who knows when...

 

[Cobra9777]

Would we rather have had a decidedly partisan Congress take months to write a relief package that considered every possible situation for every single taxpayer, or get something done to help individuals and businesses ASAP that will fail very quickly if the economy tanks - which seems inevitable? And the last thing they should be worried about is financially independent retirees as some of these posts posit. Let’s keep the ship afloat and not worry about varnishing the woodwork now.

From a broad brush perspective I’m pleasantly surprised at what they did agree on this quickly (assuming it passes the House) for as relentlessly partisan as they ALL are!

We needed good NOW, not perfect who knows when...

I'm all for quick action to keep the ship afloat. Absolutely no debate there. But now that it's about to become law, some of us would like to understand a few details not covered in splashy news pieces, which potentially affect us and our families. Is there something wrong with that? After all, this is a forum dedicated to ER and a specific thread to discuss this legislation.

 

[Midpack]

I'm all for quick action to keep the ship afloat. Absolutely no debate there. But now that it's about to become law, some of us would like to understand a few details not covered in splashy news pieces, which potentially affect us and our families. Is there something wrong with that? After all, this is a forum dedicated to ER and a specific thread to discuss this legislation.

There is nothing wrong with wanting to understand the details, I didn't say there was. It hasn't even passed the House and some posts here reflect disappointment in how the relief package will impact them, mostly at the margins - and this a largely financially independent audience. The relief package focused on low wage folks, folks living paycheck to paycheck and businesses decimated by a halt of unknown duration in the economy. They'll be "affected" far more significantly than relatively wealthy retirees. YMMV

 

[Midpack]

The House just passed the Coronavirus Stimulus Bill, now on to the President. I'm sure he'll sign...

 

[JoeWras]

The House just passed the Coronavirus Stimulus Bill, now on to the President. I'm sure he'll sign...

Passed with a voice vote.

The media is behind a bit on this one, many are still reporting on the delay from the crusty libertarian leaning congressman.

 

[statsman]

Passed with a voice vote...

Kind of like a firing squad where only one shooter has live ammo. You don't know who really did the killing.

 

[donheff]

Passed with a voice vote.

The media is behind a bit on this one, many are still reporting on the delay from the crusty libertarian leaning congressman.

his intransigence made a quorum fly back. Damage done. He abandoned his blocking tactics only after bipartisan criticism including from the President.

 

[aaronc879]

Can someone please post a link to the full text of the bill that comes out of the House. I am interested to see if there is anything that helps 1099 workers. I haven't seen anything yet. My state's unemployement site says 1099 workers are not covered by UE benefits but there has to be something for us, right? Right!?

 

[Tiger8693]

his intransigence made a quorum fly back. Damage done. He abandoned his blocking tactics only after bipartisan criticism including from the President.

He didn't abandon anything, was just overruled as they "said" they had a quorum. I'm assuming they actually did,

 

[Tiger8693]

Would we rather have had a decidedly partisan Congress take months to write a relief package that considered every possible situation for every single taxpayer, or get something done to help individuals and businesses ASAP that will fail very quickly if the economy tanks - which seems inevitable? And the last thing they should be worried about is financially independent retirees as some of these posts posit. Let’s keep the ship afloat and not worry about varnishing the woodwork now.

From a broad brush perspective I’m pleasantly surprised at what they did agree on this quickly (assuming it passes the House) for as relentlessly partisan as they ALL are!

We needed good NOW, not perfect who knows when...

I will say that I am not sure with our political system how to do it differently to avoid all of the pork, but your statement is exactly what they are hoping for... that people will be fine with the "fat" so that they can get what is actually needed.