On December 27th, President Trump moved forward and signed the COVID-19 relief bill. This legislation had expeditiously passed both the House and Senate the prior Monday and was waiting for the President’s signature to make it official. This bill is the second major stimulus package passed in 2020. The final version of this bill provides needed financial help for both business and individuals. Highlights of the $900 billion Coronavirus relief package as it impacts individuals are noted below:

Additional Stimulus payments to taxpayers to begin being paid out – similar to the Economic Impact Payments (EIP) paid out earlier this year.

  • $1,200 for married filing joint tax filers plus $600 for qualifying dependent children
  • Phase-out begins at $150,000
  • $600 for all other tax filers plus $600 for qualifying dependent children
  • Single and MFS Phase-out begins at $75,000
  • Head of household Phase-out begins at $112,500

Expansion in the special charitable deduction allowed for Non-Itemizers.

  • The new stimulus package allows taxpayers who do not itemize their tax returns to take a charity deduction in the amount of $600 for married filing joint filers and $300 for all other filers in 2021.  For 2020 the allowed amount is $300 for all tax filers. Only cash contributions paid directly to a charitable organization qualify for this deduction.

Revocation on the Limitation on Charitable Contributions.

  • There is no income limitation on the allowed amount for a taxpayer’s charitable contribution of money for 2020 and 2021 tax years.

Expansion of expenses qualifying for the educator expense deduction.

  • Qualified educator expenses will now include amounts paid for personal protective equipment (PPE) and other supplies used in the prevention of COVID-19 in the classroom. This deduction is still capped at $250 per year which many teachers were already spending annually on supplies.

Changes to employer flexible spending accounts (FSAs).

  • The grace period for unused benefits and contributions to employer FSAs (such as for medical expenses and dependent care expenses) has been extended to 12 months after the year end for 2020 and 2021.
  • Special carryforward rule where a dependent “aged out” during the Pandemic by turning 13. DCB funds can now be used for such child under age 14.
  • Employer FSA plans can allow employees to make prospective changes to their contribution amounts mid-year in 2021 without a valid change in status event.

Additional unemployment benefits provided

  • Supplementary Federal Pandemic Unemployment Compensation (FPUC) in the amount of $300 per week to be provided for 11 weeks to qualifying individuals – extended to March 14, 2021.
  • $100 per week additional benefit for certain “mixed-earners” (individuals who earned income as both an employee and as a freelancer who earned at least $5,000 in self-employment income).