Congress continues to debate on the second round of stimulus designed to throw lifelines to every American in what is being called the “Coronavirus Recession.” Their self-imposed deadline to agree is August 7th and has us watching developments closely this week. Here’s our quick analysis. Democrats have proposed the Heroes Act and Republicans the HEALS Act. Both have plenty of well-meaning material proposed, but some key differences they will need to meld.
We are watching these 4 areas closest:
It appears they agree that some form of $1200 payment will come again to all individuals like what we experienced in the CARES Act earlier this year. We expect this to once again be figured on the same income formula based on the most recent tax return filed. More Americans have now filed their 2019 returns, so those who were riding maximum income lines could experience changes.
The biggest difference of the two is the formula for dependents. This outcome is still largely in question. Democrats in the Heroes Act propose a maximum number of three qualified dependents at $1200 each while Republicans in the HEALS Act figure $500 each with unlimited dependents.
While the $600 boost expired July 31st, upgraded unemployment benefits are still in the works.
The Heroes Act allows for extending the CARES plan of $600 per week through January 2021 for most workers and through March 2021 for those considered gig workers, independent contractors, part-time and self-employed workers.
The HEALS Act proposes a stepped down version at a $200 per week bonus through September 2020, then a 70% or more matching of lost wages through the end of the year. This act also allows for a return-to-work bonus of up to $450 per week for unemployed workers who secure a new job or are rehired.
Employee Tax Credit
This is an area that has payroll experts and software providers for payroll on their toes. The current CARES Act gives a 50% tax credit on wages up to $10,000, for companies that did not receive a PPP.
- The Heroes Act increases this to 80% of up to $15,000 in wages.
- The HEALS Act would be 65% credit up to $30,000 in wages.
No matter the decision, expect payroll to become a bit more complicated as the rules change once again.
Paycheck Protection Program (PPP)
Just when we thought everyone was maximizing their potential, there could be more.
The Heroes Act plans to expand eligibility, eliminate the payroll forgiveness requirement, and extends application periods to December 31st.
Meanwhile, the HEALS Act adds more funds, expands eligibility, and allows a second loan request. This too eliminates the payroll requirement for forgiveness while also expanding approved uses of forgivable funds.
No matter the outcome or which Act prevails, there will be inherent changes to personal and business finances ahead for most Americans. We will continue to monitor the events including the $20B on the table for Agriculture and additional State funding opportunities.
Continue to seek advice from your trusted financial advisors and reach out with questions.
If you have questions about the HEALS or Heroes Act, contact our experts today!