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Stimulus Bill 2.0: Recovery Rebates and More Thumbnail

Stimulus Bill 2.0: Recovery Rebates and More

Congress pass a massive bill recently. The official name is the Consolidated Appropriations Act of 2021. Most people are calling it Stimulus 2.0. Names aside, it comes in at over 5,000 pages. The bill's most highlighted provision is direct payments to Americans, but there's so much more. This bill has the potential to affect your family for years to come. Keep reading for some components of the bill we believe are important for families like yours. 

"Wealth is a crown for the wise; the effort of fools yields only foolishness." Proverbs 14:24

6 Parts of the Stimulus Bill that are important to families



Recovery Rebate Payments


There is a provision in the bill for money going directly to many Americans. Some fine print is included and may affect your household, so understand what I'm sharing is high level.

Also note this is similar to steps congress passed last spring, but not identical.

The payments are $600 per eligible individual. There's income requirements and age requirements for children.

Children need to be 16 or younger to qualify. To get the full payment for a family filing taxes jointly, your adjusted gross income needs to be under $150,000. Over that income threshold, your amount is either reduced or eliminated.


Adjusted Gross Income

You can check AGI on your tax return


Some Payment Scenarios

All examples assume the family files taxes jointly and their income (adjusted gross income or AGI) is below $150,000.

Example 1

A family consisting of Mom, Dad, and two children aged 10 and 12. They will receive $2,400.

Example 2

A family consisting of Mom, Dad, and three children aged 4, 8, and 17. They will receive $2,400. (The 17 year old is ineligible)

Example 3

A family consisting of Mom, Dad, and one child aged 11. They will receive $1,800.

Example 4

A family consisting of Mom, Dad, and five children ages 1,3,5,9, and 13. They will receive $4,200.

Example 5

A family consisting of Mom, Dad, and a child born December 15, 2020. They will receive $1,800.

Stimulus 2.0 Recovery Rebate Example


Changes to How You Pay for College

FAFSA Stimulus 2.0

Applying for Financial Aid

Starting July 1, 2023, the Fee Application for Federal Student Aid (FAFSA) will undergo significant changes. As a reminder, FAFSA is the form everyone should fill out each year your family has a student in college. It's a perquisite to many financial aid opportunities. 

Expected Family Contribution (EFC)-You may have heard of this term before which is used to determine your family's wherewithal to pay for school. In the future, this will not be called the Student Aid Index. 

Faster Applications-The FAFSA form, while important has always been a long process. The application will go from 108 questions down to 36!

Taxes and College

Tax Changes-A deduction (Tuition and Related Expenses) will be eliminated in 2021 and forward. On the other side though, a credit (Lifetime Learning Credit) will be easier for more families with a college student to take advantage of. Overall, this is a good change. 



A Path to Eliminating your Student Loan

Student Loan Stimulus 2.0

What if there was a pay down your student loan with tax free money? There could be as a result of this bill. 

This option was initially authorized only for 2020, but this bill opens the door through 2025. Here's how it work:

The provision allows your employer to provide up to $5,250 of annual assistance to pay down principal or interest on your student loan. The money paid is tax free to you and your employer. Bear in mind your employer would need to choose this and the amount could be be well below the limit. There's a some fine print and considerations, but this has the potential to be life changing for some families contending with outstanding students loans. 

Learn More about how this could work for your student loan


Paying for Preschool, daycare, etc. 

Many families use a Dependent Care Flexible Spending Account (FSA) as part of their benefits at work to help pay for childcare. Many folks ended up not using money in their FSA this year due to many facilities closing throughout the year. Ordinarily, FSA money is use it or lose it for each year. 

If you still have money in a dependent care FSA, there's hope. The bill authorizes employers/FSA providers to carryforward unused money to 2021 and also 2022. This could be huge for some families. The big caveat here is the bill allows it, but does not require it. Your employer still has to make the decision to offer a carryforward for employees. If you could be affected by this, ask your benefits department or representative. 


Expanded Unemployment Benefits

Unemployment programs are administered by individual states. This bill supplements those state-run programs. The amount of benefits is temporarily increased with this bill. The length of time benefits are offered is also increased. 



Small Business Assistance

Small Business Stimulus 2.0

There are many provisions in the bill that apply to small businesses. Each provision, while it could be invaluable if you own a business, has requirements so be sure to review options carefully. Here's a few important ones. 

Loans-Some small businesses will have the ability to apply for loans designed primarily designed to retain employees. 

Loan Forgiveness-Certain loans have the potential to be "forgiven" 

Taxes-The taxability of certain loans has been adjusted (for the better). 

Grants-Some venues (mostly theaters or in-person reliant event locations) are eligible for grants to cover some expenses. 


Roundup

This post is far from comprehensive. This is a small sample of provisions in this bill. Some of these changes will continue to evolve over time with new information about their implementation and details that will come to light. We'll be monitoring over time for benefits and pitfalls for families like yours. 


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