Impact of the Second Stimulus Package

Posted by: Joseph Kuo | December 29, 2020

Now that the second stimulus package has been signed into law, here’s how it can affect you.

Stimulus Check

The income thresholds for the second stimulus check of $600 per adult and child will be based on your 2019 Adjusted Gross Income (AGI). The maximum AGI at which you’ll no longer be eligible (commonly known as the “phasing out” level) will be a bit lower compared to the first stimulus package. The thresholds vary depending on filing status:

  • Single: Under $75,000 to receive the full $600 and phasing out completely at $87,000 (was $99,000 in the first stimulus).
  • Head of Household: Under $112,500 to receive the full $600 and phasing out completely at $124,500 (was $146,000 in the first stimulus).
  • Married Filing Jointly: Under $150,000 combined to receive the full $600 and phasing out completely at $174,000 combined (was $198,000 in the first stimulus).

In addition, non-US citizens with a citizen spouse filing jointly will now be eligible for the second stimulus check, as long as the non-US citizen has a Social Security Number. (Couples with a non-citizen filing jointly were not eligible for the first stimulus check.)

Impact For Small Businesses

If you are a small business owner, the second stimulus package provides a few items to consider.

Paycheck Protection Program

If you own a business with fewer than 300 employees that was adversely impacted by COVID-19, it might be eligible for the Small Business Administration’s Paycheck Protection Program, which provides loans of up to $10 million that can be used to offset payroll expenses. Under certain conditions, portions of this loan can be forgivable. Your business must be able to show a revenue reduction due to the pandemic of more than 25% during the first three quarters of this year compared to 2019.

The Paycheck Protection Program had previously run out of funding back in August, but the second stimulus package will provide an additional $284 billion in funding to resume this program.

Payroll Taxes

If you were allowing employees to defer Social Security withholding from their paychecks (an option available since the President’s executive order from August), you now have until the end of 2021 to re-implement the withholding so that your employees can repay the deferred amounts. Any deferred amounts that are not repaid in full at the deadline become the responsibility of the business.

Grants For Public Event Businesses

The second stimulus package allocates $15 billion in grants to assist businesses that rely on large public gatherings, such as theaters and live event venues. Up to $10 million is available to such businesses, and it can be used on a wider range of expenses including rent and utilities.

Liability Protection Due to COVID-19

Business liability protection from lawsuits related to COVID-19 was not included in the second stimulus package, but could be revisited if there is a third stimulus package next year.

Housing Protections For Tenants

If you own a rental property and your tenants are behind on their rent due to income loss caused by the pandemic, they are now protected from eviction until January 31, 2021. (Tenants in California were already covered by that state’s Tenant Relief Act.) The second stimulus package will also provide federal assistance to help tenants to pay off back rent, so if you are owed rent, you might want to consider advising your tenants of this option once details are finalized.

Unemployment

If you are a contractor or self-employed and suffered income loss due to the pandemic, the Pandemic Unemployed Assistance Program, which provides up to 39 weeks of benefits for the self-employed, contractors, and gig workers, will be extended. If you aren’t in the program yet, you now have until March 14, 2021 to apply. If you are already in the program, your eligibility will be extended until April 5 or until you have received the full 39 weeks, whichever happens first.

Those who are already receiving regular unemployment benefits from their state will receive an additional $300 per week in benefits until March 14, 2021.

(Note: We realize that the situation is very fluid and there are more relief measures in various stages of the legislative process. We’ll be posting a follow-up article if any additional relief measures are passed.)