Home Guides & Resources chevron_right Financial Planning The Consolidated Appropriations Act: What It Means for You January 8, 2021 After months of handwringing, Congress finally passed a second stimulus bill on December 21, 2020—the Consolidated Appropriations Act. Here are the main provisions that might have an impact on your finances: Stimulus Checks. Congress authorized one-time, non-taxable payments of up to $600 per qualifying individual (or $1,200 per couple) plus $600 per child. Of course, “qualifying” is the operative word here. Similar to the first round of stimulus checks, there are income limits where payments begin to phase out. Taxpayers whose adjusted gross income (AGI) in 2019 was less than $75,000 for single filers, $112,500 for heads of households or $150,000 for married couples filing jointly will be entitled to the full benefit. Payment amounts are gradually reduced at higher levels of income until they are cut off altogether. If you earn more than $87,000 as a single filer (or $174,000 as a couple), you won’t be receiving a check. As for children, that $600 only applies to those who were claimed as dependents aged 16 or younger on your 2019 tax return. The Return of RMDs. Congress did not extend the temporary waiver of required minimum distributions (RMDs) into 2021. As a result, we will resume normal RMDA required minimum distribution is the amount of money that must be withdrawn each year from tax-deferred retirement accounts once the beneficiary reaches retirement age (72, according to IRS rules). procedures for all of our clients who qualify in 2021. If you’d like to review your RMD requirements, please call us. Personal Income Tax Changes. The Consolidated Appropriations Act brings a handful of updates on the income-tax front—we will mention two of them here. First, the threshold to claim an itemized medical expense deduction was permanently lowered to 7.5% of AGI, a victory for folks with high health care expenses. (It had been scheduled to increase to 10% this year.) Second, the Act extends some of the charitable contribution benefits put in place by the 2020 CARES Act: Taxpayers can continue to take an above-the-line deduction of $300 (or $600 if you file jointly with a spouse) for cash contributions to charitable organizations in 2021. Taxpayers can also continue to deduct up to 100% of their AGI for cash contributions to qualifying charities. Extended Federal Unemployment Benefits. The CARES Act introduced a host of measures to help the unemployed get through the economic crisis. The Consolidated Appropriations Act extends regular unemployment benefits for 11 additional weeks and increases the dollar amount by $300 per week. This extension also applies to self-employed workers. Note that this is a step down from the $600 weekly increase introduced by the CARES Act. PPP Round 2. The return of the Paycheck Protection Program, version 2.0, brings myriad questions but the bottom line is this: Congress expanded and streamlined PPP to be more robust in an attempt to help as many businesses as much as possible. Businesses that did not receive a loan under the original PPP will be eligible to apply for financing. Businesses that already acquired and spent loans during the first round of PPP funding may be eligible to collect additional financing. However, this second round of PPP is harder to qualify for. This list is far from exhaustive but it provides a good overview of what’s in the bill. If you have any questions regarding how the Consolidated Appropriations Act might affect you, please contact your wealth management team. We are happy to help. 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