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    Don’t Miss These Benefits in Stimulus 2.0

    By Brandon Miller, CFP–

    I haven’t seen the new Wonder Woman movie, but I hear it’s not as good as the first one. At least you still get to see Gal Gadot in her What-a-Woman! wardrobe and Chris Pine looking soulfully into the camera. (Didn’t his character die at the end of the first movie?)

    Sequels rarely live up to the original. But Stimulus, The Sequel is both worse and better than the first Stimulus. Since you likely don’t want to read the whopping 5,500+ pages of legislation yourself, let me run through the major plot lines for you.

    Stimulus Check. This is probably the sequel’s biggest disappointment. It offers only $600 maximum per eligible person versus the $2,000 provided in the first package. Like the original, if you are single and make more than $75,000 or part of a joint-filing couple that earns over $150k, you will get a reduced amount or nothing at all if your income is over the cutoff threshold.

    If you are eligible for a payment, so are your dependent children under 17. Very good news for Octomom’s family. And you don’t have to pay taxes on any amount you receive.

    Eligibility is based on your 2019 tax return. Don’t worry if you earned too much in 2019 to qualify for a payment, but your 2020 adjusted gross income dropped off greatly. Instead of a check, you’ll get a credit on your 2020 tax return to compensate.

    Unemployment Extension. Benefits have been extended through the middle of March this year and provide for an extra $300 on top of the usual unemployment amount. Independent contractors can potentially receive these benefits as well.

    Medical Expenses and FSA Changes. You can deduct medical expenses when they exceed a certain percentage of your income. The rate used to fluctuate, but this law fixes it at 7.5%. Also, Flexible Spending Account funds that you used to lose if you didn’t use them within the calendar year can now be carried over for one year.

    Tuition Assistance. The Tuition and Related Expenses deduction is disappearing after 2020, but more people will be able to quality for the Lifetime Learning Credit. Credits are better than deductions, so this is a win for many people. Since this benefit can be used for continuing education expenses for adults, you may be able to afford that Road Scholar learning adventure in the Azores after all. 

    Charitable Deduction. You can write off up to $600 in charitable deductions for 2020 and 2021, even if you don’t itemize your taxes and take the standard deduction instead.

    Earned Income Tax Credit. Did you get laid off, retire, or even intentionally cut back on your work in 2020? You might qualify for this credit. Your 2019 income will determine the amount of your benefit.

    If you own a small business or earn 1099 income from self-employment, independent contracting, or gig work, the Stimulus sequel gives you another take on the Paycheck Protection Program.

    Your business may be eligible for PPP2 money if your revenue dropped 25% or more in any one quarter of 2020 versus that same quarter in 2019. At least 60% of the money you receive has to be used for payroll expenses if you want the loan to be forgivable.

    Loan amounts are based on your monthly payroll, including what you pay yourself if self-employed. You can apply for 2.5x your monthly payroll. Chalk up another improvement for the sequel—Congress threw a bone to the restaurants and hotels that have been particularly hard hit by pandemic lockdowns. If you own a food or accommodation business, including Airbnb rentals, you can apply for 3.5x monthly payroll.

    The Employee Retention Credit also makes an appearance in Stimulus 2. It has been bumped up considerably so that eligible businesses can now get a tax credit of up to $7,000 per quarter. Plus, you can qualify for both a PPP loan and the Employee Retention Credit (it was either/or in the first stimulus package), though you can’t use the same wages for both programs.

    Sequels are big business, whether the drama comes out of Washington or Hollywood. Rumor has it that Warner Bros. has already fast-tracked the third Wonder Woman movie. Let’s hope Congress plans to release Stimulus 3 sometime soon as well.

    The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. Brio does not provide tax or legal advice, and nothing contained in these materials should be taken as such. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

    Brio Financial Group is a registered investment adviser. SEC Registration does not constitute an endorsement of Brio by the SEC nor does it indicate that Brio has attained a particular level of skill or ability. Advisory services are only offered to clients or prospective clients where Brio Financial Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Brio Financial Group unless a client service agreement is in place.

    Brandon Miller, CFP®, is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.

    Published on February 11, 2021