COVID Relief

Issues: Jobs and the Economy

FAQs on the latest COVID Relief Package

On Wednesday, March 10, the House voted to pass the latest stimulus package and, the following day, President Biden signed it into law. We’ve included some frequently asked questions and answers about the American Rescue Plan below.

What’s happening with the child tax credit?

This is one of the most exciting and innovative parts of the bill. People expect it could help cut child poverty in half. Here’s how it works:

If you earn less than $75,000 (or your household earns less than $150,000) you’ll receive $3,600 for each child under age 6 and $3,000 tax for each child aged 7-17. If your income exceeds that threshold, the credit will be reduced by $50 for every additional $1,000 of income. Individuals earning $95,000 or joint filers earning $170,000 are not eligible for the tax credit.

The tax credit applies to your 2021 tax year, but the IRS will advance part of the credit in the forms of checks that will be delivered or direct deposited as early as July. These checks will continue at semi-regular intervals through December. The remaining amount will be credited against your taxes when you file next year.

The child tax credit is available to those living in U.S. territories. It is also entirely fully refundable and doesn’t require an individual to be employed to qualify.

Am I eligible for the child tax credit if I’m having a baby this year?

Yes. The bill includes a provision that allows any person who gives birth in 2021 to receive the third $1,400 stimulus check for that child after filing their tax return in 2022.

How much are the stimulus checks and who will get them? When will they arrive?

Under the bill, single filers with incomes up to $75,000, head of household filers with incomes up to $112,500, and joint filers with incomes up to $150,000 will receive payments of $1,400. Those making more than that income threshold will receive lesser amounts, and those single filers making more than $80,000 (head of household filers making $120,000, and joint filers making $160,000) will receive no stimulus payment at all.

If you have direct deposit set up with the IRS, you may have already received the check. If you receive your tax refunds via check or prepaid debit card, those should arrive in the mail over the next few weeks. If you receive your tax refunds via check or prepaid debit card, those should arrive in the mail over the next few weeks. Additional information and resources are available here.

Are adult dependents eligible for stimulus checks?

Unlike previous payments, adult dependents (those who are 19-24, retirees, or adults with disabilities who rely on another person for more than half of their expenses) are now eligible for payments, as long as the filer who claims them as a dependent meets the eligibility requirements listed above. 

The check will be sent directly to the filer who claims the dependent, not the dependent.

Previously, only dependents under 17 were eligible.

Are mixed status or undocumented families eligible for a stimulus check?

In cases of mixed status families where only one spouse has a Social Security number, the family would get a payment of $1,400 for the spouse with a number, plus $1,400 for each dependent who also has a Social Security number.

If both parents are undocumented but their dependent is a U.S. citizen, then that dependent does qualify for a check - as long as their parents filed their taxes with individual tax identification numbers (ITINs).

What tax return year is the government using to determine eligibility for a stimulus check?

Under the bill, the IRS is directed to make payments initially based on people's 2019 tax returns or their 2020 returns if they've already been filed.

What if I never received my first or second stimulus check?

If you were eligible to receive the first or second stimulus check and didn’t receive it, you must claim the Recovery Rebate Credit when you file your 2020 taxes. This form is for paper filers. E-filers should have the option in whatever software they used to file. Additional information on claiming the Recovery Rebate Credit, as well as eligibility criteria for filing your federal income tax for free online or at a volunteer tax preparation location near you, can be found here. Also, note that the Federal Tax Filing Deadline is now May 17, 2021.

Are stimulus checks tax free?

Yes, stimulus checks are not considered taxable income; therefore, they will not be taxed and also will not affect your eligibility for any federal government assistance or benefit program.

Will unemployment assistance be extended? Do I have to pay taxes on my unemployment benefits?

The current $300/ week federal benefit will be extended through early September. The first $10,200 of unemployment benefits received in 2020 have also now been designated tax free for households making less than $150,000. As the IRS continues its review of provisions in the American Rescue Plan, please visit this page for the latest updates.

How can I access the rental aid in the bill?

Applying for rental assistance varies from state to state. The state of Rhode Island provides rental assistance through HousingHelp RI from the previous rental assistance granted by the CARES Act and we are expecting them to update that program once the state is allocated the funds from the American Rescue Plan.

What support does this bill provide to small businesses?

The bill funds $15 billion in Economic Injury Disaster Loans (EIDL) grants, expands Paycheck Protection Program (PPP) eligibility, and dedicates an additional $7.25 billion in funding and additional resources to help small and disadvantaged businesses navigate and access COVID relief programs. More information is available here, and information from the SBA Rhode Island District Office is available here

The bill also allocated $28.66 billion for a new program at the SBA to offer assistance to restaurants and bars hardest hit by the pandemic. $5 billion is set aside specifically for smaller establishments with less than $500,000 in 2019 annual revenue. During the first 21 days, applications from restaurants owned and operated by women, veterans, or socially and economically disadvantaged individuals will receive priority.

Federal funding allocated directly to the State of Rhode Island through the American Rescue Plan may also be used to provide additional support to small businesses. Information about state-run programs for small businesses can be found here.

What help is available if a change in my employment is jeopardizing my health insurance?

If you choose to use COBRA to continue your existing employer-sponsored health coverage, the bill provides a 100% subsidy beginning in April through September 2021. For those six months, this subsidy covers all costs associated with COBRA, including the employer contribution. The only exception being individuals who are eligible for other group health coverage or Medicare - they are not eligible for the COBRA subsidy.

This bill also provides subsidies if you buy health insurance off your state’s Obamacare exchange. Any individual who receives unemployment at any point in 2021 can purchase an ACA silver plan for zero premium.

Additionally, under the bill, no one will have to pay more than 8.5 percent of their income for a silver plan in the ACA marketplaces. It also provides that individuals below 150% of the poverty level pay no premiums at all compared to 4% of their income currently. HealthSource RI is Rhode Island’s official marketplace for health insurance coverage. Information about the benefits of the American Rescue Plan for those receiving Health Coverage Through HealthSource RI, as well as information about how to enroll, can be found here.  

How will this bill help schools reopen?

The American Rescue Plan makes nearly $130 billion immediately available to State Education Departments so they can: 1. Get schools open safely 2. Keep schools open safely 3. Make up for lost learning time. Superintendents, school boards, the PTA, and others told Congress they need the American Rescue Act and we are listening to them.

The American Rescue Plan also provides resources for higher education, Head Start, and childcare facilities.

How will the American Rescue Plan get more COVID-19 vaccine shots into arms?

The American Rescue Plan will get shots in arms with a coordinated, nationwide vaccine program. The Plan will make sure we have enough vaccines for all Americans through research, development, manufacturing, production, and purchase. Those vaccines will get out to all Americans quickly and equitably through community vaccination centers, mobile vaccination units and more. It will also scale up testing and tracing, address shortages of personal protective equipment and other critical supplies, invest in high-quality treatments, and address health care disparities. For the latest guidance on the vaccination effort in the State of Rhode Island, including information on vaccine eligibility and registration, visit here.