How the second stimulus control is similar but different to the first stimulus control

Yesterday, Senate Leader Mitch McConnell (R-KY) announced the HEALS Act on the Senate floor and several senators proposed their respective parts.

One of the most anticipated parts of the new proposal is the upcoming stimulus control, which was the responsibility of Senator Chuck Grassley (R-IA), chairman of the Senate Finance Committee.

Senator Grassley’s office then released the legislative text for the United States Worker, Family and Employer Assistance Act, which provides for the second recovery refund.

In many ways, the second stimulus check is a repeat of the first. In some ways, however, he is a little more generous. Let’s take a closer look.

MORE FROM FORBESNext stimulus package released today: $ 1,200 stimulus check, reduced unemployment aid under the HEALS Act

How the next stimulus control is the same

The base amount of the check

The amount of the check is the same: Individual taxpayers get $ 1,200 and joint taxpayers get $ 2,400. You get an additional $ 500 per dependent, although the definition of dependent was expanded (more on that below in the section on differences).

The income limits, which refer to adjusted gross income (AGI), are the same:

  • Individual filers – $ 75,000
  • Joint filers – $ 150,000
  • Heads of Household – $ 112,500

If you have an AGI greater than those limits, your check is reduced by 5% of your AGI above the limit.

For example, a single filer with an AGI of $ 80,000 would see a reduction on their check of $ 250, that is, 5% of $ 5,000, the amount greater than $ 75,000. So instead of getting $ 1,200, that single filer would get $ 950.

The fiscal year used to calculate your check

The second stimulus check, like the first, will use your 2019 earnings to calculate the amount of your check. If the IRS doesn’t have that information, you can use the 2018 fiscal year information as an alternative.

This is the same as with the Care Act, except that the Care Act also extended the expiration date of your 2019 tax return to July 15. This meant that when the IRS sent the checks, many Americans had not yet filed their tax returns. Since anyone can get an automatic extension until October 15, 2020 for their 2019 returns, some taxpayers have yet to file.

Chances are if you don’t need to file a tax return, you can update your information on IRS non-filers – enter the payment information used for the first check here.

The tax check structure

Although the stimulus check will be based on your 2019 or 2018 income, the checks are technically advances on a refundable tax credit for fiscal year 2020. If your income decreases in 2020 and you qualify for a larger stimulus check than the one you sent to you, you can collect the difference next year.

You are protected against federal or state debts

The second check will also be protected against federal or state debts, with the exception of overdue child support payments.

How the next stimulus control is different

The key differences between the first and second checks are found in three areas.

Extended definition of a dependent

With both stimulus controls, you get $ 500 for each eligible dependent. For the first check, the only eligible dependents were qualified children for the purposes of the Child Tax Credit, that is, children under the age of 17.

This left out many dependents, especially children in college who still depend on their parents but are over the age of 16 and older family members. The United States Worker, Family, and Employer Assistance Act removes the age limits and provides $ 500 for all dependents.

Deceased and imprisoned Explicitly excluded

The second stimulus check will not be awarded to those who died before January 1, 2020 or those who are in jail throughout 2020.

The Care Act did not include any language covering this, but the Treasury Department withdrew the payments and canceled the uncollected checks to these two groups. The bill now clearly states that both groups are excluded from receiving this second check.

It is protected against creditors and debt collectors.

The Senate Act would also add additional protections against repossessions or bank collections by debt collectors. In fact, the new law would amend the Care Act to offer those protections to the first check as well.

How the upcoming stimulus check differs from the Heroes Act

Given that Senator Grassley’s bill is, at this time, just a proposal, how will Democrats perceive it?

The Heroes Act was passed by the House of Representatives in mid-May and also included a similar stimulus check. As we look towards the negotiations between the two sides, we can use this as an indicator of how controversial this aspect of the bill could be.

The Heroes Act offered an identical base stimulus check of $ 1,200 for individual taxpayers ($ 2,400 for joint taxpayers) with the same income limitations. It differed in that it offered $ 1,200 more per dependent addition, with a limit of three dependents.

As we monitor how both sides are responding to the HEALS Act proposals, there doesn’t seem to be much controversy around the second stimulus check. Of the elements proposed in the United States Workers, Families and Employers Assistance Act, the biggest argument seems to be about the reduced benefits of federal unemployment insurance.

Forbes AdvisorSecond Stimulus Verification Calculator: HEALS Act

The proposed bill seeks to reduce the federal benefit to 70% of an employee worker’s lost wages. Since this will be difficult to implement for many states, the bill would first provide a $ 200 per week benefit through September as states modernize their systems to support a percentage-based benefit.

To further complicate matters, the bill is part of a series of bills that will make up the HEALS Act. This likely establishes a major legislative battle that will be difficult to resolve before the Senate is scheduled for recess on August 7.

Additional resources

Next stimulus package released today: $ 1,200 stimulus check, reduced unemployment aid under the HEALS Act

Facing the next stimulus package: the three key conflicts in the next stimulus bill

How soon could I get a second stimulus check?

The income limit on the second stimulus check is likely to be over $ 40,000

The next stimulus project will likely have these three main changes

Second-stimulus controls must be recurring and direct, 156 leading economists urge