Treasury Secretary Yellen in Favor of a Large Stimulus Package
Congress is continuing to thrash out the details of the currently proposed coronavirus relief package. A report using data sourced from a household survey finds the much anticipated $1,400 direct stimulus payment would help millions of American households stay current with their bills for several months.
The data gathered by Morning Consult economist John Leer indicate the amount targeted for release March 1 will help more than 30 million heads of households unable to meet their obligations in January, the majority of which have a household income of $50,000 a year, or less.
According to Leer, this underscores how the loss of income is concentrated among low-income adults.
The proposal currently being considered includes measures other than the direct stimulus package. Congress is also addressing enhanced federal unemployment benefits and raising the minimum income to $15 per hour.
The current proposal under discussion calls for direct payment of $1,400 per adult, $2,800 for a married couple, and $1,400 for every child and adult dependent.
Income Levels Remain the Same
It is proposed that payments continue to be based on the same income criteria used for the first two checks. Individual recipients with no more than $75,000 AGI (Adjusted Gross Income), heads of households with no more than $112,500 AGI, along with married couples with an aggregate AGI of $150,000, would all be eligible for full payment.
For those above these levels, checks would be phased out. There would be a cap for those earning $100,000, heads of households earning $150,000, and married couples earning $200,000.
The stimulus package is currently under deliberation in both the House and Senate. The process being followed will prevent significant alterations to the planned amounts, although the numbers have not yet been finalized.
To assist those who need the money, some Members of Congress are pushing to lower the income phaseouts to $50 or $60,000.
Ed Mills, a policy analyst at Raymond Jones, opined, “The details are not final and could be adjusted.”
It is expected that legislation will be finalized early to mid-March.
Mid-March is when the IRS is deep into tax filing season, this alone makes it more of a challenge for the agency to process stimulus payments and incoming tax returns. Last year, the first $1,200 checks were also delivered to the public during the tax season. After deliberation, the deadline for filing tax returns was extended three months, from mid-April to mid-July.
Howard Gleckman, a senior fellow at Urban-Brookings Tax Center, praised the IRS for doing such an amazing job. Gleckman was quoted as saying, “They did much better than expected, particularly getting the first round of economic stimulus payments out.”
Some states, while awaiting further relief from the Federal Government, are issuing their stimulus checks.
This time around, Democrats are proposing that the stimulus checks to be based on either 2019 or 2020 tax returns. It is hoped that this proposal will create an incentive for people to file their taxes early. This is particularly true for those whose income dropped during the year, something that could impact on size of the payment.
Should the IRS use date pulled from 2019 tax returns, and the individual qualify for more stimulus money based on 2020 income, he or she may find that they will have to wait until next tax-filing season to get the balance of what they are due.
However, if the individual’s income during the tax year 2019 is less than 2020, he or she may get a bigger check should the IRS use last year’s return.