Financial assistance from the government to quarantined victims: who and how much will be able to receive
Many Americans may soon receive checks from the government as compensation for financial losses due to coronavirus quarantine. However, there are several bills. Which of them will be approved is not yet clear, reports CNBC.
On Thursday, March 19, Senate Majority Leader Mitch McConnell unveiled a bill proposing $ 1200 for every American, $ 2400 for a married couple, and $ 500 for every child.
The amount of payment, according to the bill, will be gradually reduced for individuals who have a declared income of $ 75 thousand a year or more or $ 150 thousand for couples who file a joint income declaration. Data will be taken from declarations for 2018.
At present, such an offer is actually providing money to Americans as a tax credit.
“These payments are not taxable, because they are essentially your own money,” said Jeffrey Levine, director of planning at Buckingham Strategic Wealth on Long Island, New York.
According to McConnell's proposal, the amount of payments will be determined by three criteria:
- if your individual tax liability is between $ 600 and $ 1200, you will receive the amount of tax liability.
- if it is below $ 600, you will receive $ 600 dollars.
- if it exceeds $ 1200, then payment from the government will be limited to $ 1200.
These amounts are doubled for couples.
Keep in mind that the proposal has not yet been approved and may be changed during the review and approval process.
Amounts offered by McConnell differ from those previously proposed by the head of the Department of Finance, Steve Mnuchin. On Thursday, he confirmed that the Trump administration wants to send $ 1000 to every adult American and $ 500 to every child.
“This is an unprecedented situation when, for obvious reason, the government ordered to suspend large-scale production so that we can win the fight against the 2019-nCoV virus,” he said in his speech.
“This affects hardworking Americans, and the president is determined to support them,” the official added.
The $ 1 trillion legislative package announced by the Republicans of the White House and Senate that Mnuchin plans to present will give every adult American a check for $ 1000 plus another $ 500 for each child. For example, a family of two parents and two children will receive $ 3000.
“As soon as Congress approves this, we will send checks in three weeks, and then, if there is still a state of emergency in six weeks, we will pay another $ 3000,” Mnuchin said.
These payments to Americans will make up half of the total costs specified in the bill.
Another $ 300 billion of the total will be used to help companies maintain wage levels and write off loans to those who will start working after the crisis ends.
US unemployment rate rises 33% between first and second weeks of March
The last $ 200 billion, according to the Mnuchin project, will be used to provide loans to airlines and other critical industries that have been hit hard by quarantine measures.
There are several possible scenarios of how taxation may or may not apply to any payments, if approved.
Advance on future return
The government can make this amount deductible from tax refunds for 2020, said Margie Dunn, a registered agent at Compass Tax & Financial Services in Monterey, California.
For example, you are single, and now receive a check for $ 1000. Next year, if you are to receive a $ 3000 tax refund, the government will deduct that $ 1000 and give you a net difference of $ 2000 in 2020 refund.
Gift from the government
Alternatively, the government might consider the checks a gift, which probably means they will be considered taxable income.
People in this case will have to pay tax on this money, based on their specific tax group.
“People who usually earn between $ 50 and $ 000 are those who are really uncomfortable if they have to pay tax,” Dunn said.
If she had been given the choice between a tax advance of 2020 or a tax on financial assistance, Dunn said she would have preferred a tax on money.
This is because low-income taxpayers will benefit more. According to her, if this is an advance, you will probably have to return the money, no matter what.
Tax free money
The last alternative is that money can be tax exempt. Experts doubt that this is possible.
“I assume that payments will not be taxable, at least for low-income people,” said Thomas Neihoff, a tax inspector at Henry & Peters PC with offices in Tyler and Longview, Texas.
Dunn said that under the US Tax Code, everything you receive is considered income unless it is tax deductible. But there are exceptions for gifts, which are defined as something for which you do not expect anything in return.
“After all, even if you find $ 20 on the road, you must report it as income. People, of course, don’t do that, but it’s in the Tax Code, ”Dunn explained.
As reported by ForumDaily:
- A new virus was discovered in the Chinese city of Wuhan in December 2019. In 2020, it covered all continents except Antarctica. On March 11, US President Donald Trump imposed a ban on entering the United States from EU countries. The ban came into force on Friday, March 13, and will last at least 30 days. In particular, it will concern people who have visited the Schengen area over the past 14 days.
- March 13 Trump due to coronavirus introduced a nationwide emergency regime in the US.
- On March 11, WHO recognized the situation with the coronavirus pandemic, which covered more than 110 countries. Symptoms of Coronavirus COVID-19 Disease Available here.
- Virologist's tips on how to protect yourself from infection - link.
- Taking advantage of the panic in the society because of the epidemic, fraudsters came up with several schemes to deceive victims of personal data and money. The most common ones can be found here.
- Having succumbed to panic due to a state of emergency, Americans are massively buying toilet paperbut they cannot explain why they need it during the epidemic.
- Trump has signed into law on paid leave due to coronavirus. Who can count on paid leave, read here.
- Read all news about coronavirus in our special project.
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