All about the New Coronavirus relief package and a second stimulus check for the NRIs in the US

All about the New Coronavirus relief package and a second stimulus check for the NRIs in the US

 

On 27th December 2020, the US Government had signed the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 into law. According to this law, a relief package of $900 billion would be delivered to the Americans as a second round of economic stimulus due to the pandemic COVID-19. This bill would help in providing relief to the Americans through the various provisions which have already been put in place by the CARES Act. 

Let us have a look at what this new Coronavirus relief package would include.

Stimulus Payments

Another wave of Stimulus payments for the Americans has begun. This Stimulus payment would be up to $600 for the eligible taxpayers, $1200 for those taxpayers who are filing their tax returns jointly, and also an additional amount of $600 for a dependent child who is below the age of 17 years.  So, if there is a family with two children then they would receive a Stimulus payment of approximately $2400. 

The NRIs in the US do not have to do anything special for being eligible to receive the Stimulus payment. The Stimulus payment would be done by the IRS by using the latest information which is present on the tax returns of the year 2019.

Who would be eligible to receive the Second Stimulus payment?

  • If you are filing your tax returns as a Single and having an AGI (Adjusted Gross Income) of up to $75,000 or if you are married and are filing your tax returns jointly with an AGI of up to $150,000 then you would be eligible for receiving the Stimulus Check.

  • For those NRIs who are filing their tax returns as single and have no qualifying dependents, the Stimulus Check payment would phase out at $87,000 and for married couples filing their tax returns jointly without any dependents the payment would phase out at $174,000.

     

  • There are possibilities of more households being eligible for obtaining the Second Stimulus payment as this bill would expand stimulus payment for those households which have a mixed-status i.e. different categories of immigration and citizenship statuses as well.

     

  • Also, those NRIs who were receiving Railroad Retirement, Social Security Retirement, or SSI income would receive the Stimulus payment without filing a tax return.

 By when would you receive your Second Stimulus payment?

 If you have not received your Second Stimulus payment yet, then you would be receiving it very soon. There have been some errors by the IRS due to which lots of Stimulus payments have been done to wrong accounts.  However, according to the IRS updates the payment for those affected by this error has been done by 8th January and many Americans must have received them too by now.

Extended Unemployment

There has been an increase in the unemployment payments and this would be $300 each week now. These benefits would be extended until 14th March 2021 now. According to this new bill, there has also been an extension to the Pandemic Unemployment Assistance (PUA). This implies that the freelancers and self-employed NRIs in the US can continue to obtain Unemployment benefits.

Moreover, some NRI workers earn a minimum amount of $5,000 in a year but are not able to avail the benefits of the Pandemic Unemployment Assistance as they have an employer. But, now with this New Coronavirus relief package, these workers can even avail the benefit of receiving $100 extra in a week as Unemployment benefits.  

The EITC and CTC

The New Coronavirus relief package would help the Americans having low income in using their income from the year 2019 for determination of their EITC (Earned Income Tax Credit) and even that part of the Child Tax Credit (CTC) which is refundable.

Expansion of the PPP 

Under the New Coronavirus relief package, the NRIs can also receive a second round of payments under the PPP (Paycheck Protection Program). Due to the expansion in the Paycheck Protection Program; there has been an expansion in the category of business expenses which can be forgiven under those loans that have been taken for meeting the supplier costs.

Contractor Paid Leave

Those contractors who have not been able to work for a temporary period due to the restrictions like the closure of facilities would receive reimbursement for their paid leaves taken. 

Eviction Moratorium and Rent Assistance

Furthermore, the New Coronavirus relief package provides an extension for the moratorium on evictions until 31st January 2021. Those families which are not able to pay their past rent or have problems related to future rent payments would be receiving financial assistance.

Extenders related to tax 

Tax extenders would be providing tax relief to individuals as well as NRI families with the help of mortgage relief, relief on medical and education expenses as well.

Conclusion

So, the New Coronavirus relief package and the second stimulus payment would help in providing some amount of financial assistance to the Americans during these difficult times thus, reducing the financial stress.

When Can I Get A Natural Disaster Tax Deduction?

When Can I Get A Natural Disaster Tax Deduction?

When Can I Get A Natural Disaster Tax Deduction?

Can I Get A  Tax Deduction? Natural disasters can cause and leave behind severe damage, once they are done. Hurricanes in recent times have done a lot of damages for individuals and communities. And the official season for hurricane stars from June to November. Thus, it is important that you prepare for the same even if you stay in an area, that is not known for hurricanes.

In the event that you have incurred some loss from a hurricane or any other natural disaster for that matter, you can write off some damages on your tax returns. This includes disasters such as earthquakes, floods, fire, etc.

How To Prepare For A Natural Disaster?

It is very difficult to prepare yourself for a natural disaster. However, there are a few precautionary steps that you can follow to maximize protection against it.

  • Know the Storm

It is essential that you stay on the top of the storm. Not literally. But being aware of the category, the direction in which it is headed, whether you should vacate your home or not, etc. will be helpful.

  • Create an Emergency Plan

You can start with creating a supplies kit for the disaster. This can contain stuff like any prescribed medications, blankets, flashlights, pillows and any other essentials. As a part of the emergency plan, you can decide on a general meeting place in the event of an emergency.

  • Secure Your Documents

Ensure that all your essential documents are kept in a box that is weatherproof. You can also make a copy of all the documents and keep them in a separate location. Consider creating a digital copy of the second set.

  • Protecting Your Home

You can carry out a few simple steps to reduce the amount of damage caused by a storm. For example, you can install storm shutters or replace your roof or make minor adjustments to protect your house against storms. You can also take pictures of your house so that you have documented how it looked before the damage to show it to the insurance company.

  • Quick check on your finances and insurance

Take a quick look at your emergency fund and decide if it’s enough. If it is not you can set aside anadditional amount till the disaster. You can also check your insurance if it covers natural disasters such as flood fire. If it does not,you can make minor adjustments.

What Disasters Would Qualify For Tax Deduction?

As per the Tax Cuts and Jobs Act,you can write off only disasters that have been declared federally.For example, hurricane Harvey in 2017 and the California wildfires were federally declared disasters. If your tax records come under the disaster area as per the federal records,you are eligible for the benefits. As an affected taxpayer you’re eligible for these unique benefits. And it is not limited only to individuals as sole proprietors, business entities and business owners can also benefit from it.

Are There Any Special Rules For The Affected Taxpayers?

Yes. Here are some of the special rules for the affected taxpayers.

  • Access To Retirement Accounts

You can withdraw up to $100,000 from your retirement account to pay for damages.

  • Deductions

In the case of an official disaster, you can deduct $100 from the total damage caused. And then you can deduct up to 10% of your adjusted gross income.

  • Tax Filing Extension

For natural disasters, the government might allow for an extension of the tax filing deadline, beyond the standard 6 months extension.

Natural disasters can be very difficult. With the above, you can reduce your recovery duration by a small margin.

 

 

 

 

 

Save money by knowing your Tax Benefits for your Dependents

Save money by knowing your Tax Benefits for your Dependents

Save money by knowing your Tax Benefits for your Dependents

If you are a citizen in the US or you are paying tax in the US, you can be able to save a lot of money by claiming dependents on your payable taxes. If you are having children and other qualifying dependents that can be used to claim tax benefits, then you are saving a lot of money.Save money by knowing your tax benefits for your dependents.According to the tax laws in the US in the earlier times, for every qualifying dependent, you are qualifying to reduce your income which is taxable by $4050.

The major purpose behind this is significant savings and if you are successful in claiming multiple dependents those savings get accumulated and in turn, you save a good amount on taxes.

By claiming dependents, the scope for other credits such as Earned Income Tax Credit, Child Tax Credit, etc. arises which can be quite beneficial for you. However, the law for the reduction of taxable income by $4050 for every qualifying dependent is not valid since 2018. But there are a number of tax benefits which you can still claim for your qualifying dependents.

Who is a qualifying dependent for the tax benefit in the US?

There are two qualifying categories of dependents who qualify for being used to claim tax benefits. Both the dependents should satisfy the below-mentioned criteria for being able to be used to claim tax benefits.

  • The dependent must be a citizen of US, US resident, US national or a Canadian or Mexican resident.
  • You are not permitted to claim a dependent that is opting for a personal exemption for him and is claiming another dependent on his own tax form.
  • You are also not permitted to claim a dependent that is married and is himself filing a joint tax return.

Your qualifying children

  • You can claim tax deductions for your own children, your siblings or even your grandchildren as your qualifying dependents.
  • The child whom you are claiming should be below the age of 19 and should have lived with you for more than half a year.
  • The child should not be able to provide more than half of his own support and you should be the only person claiming him.

Your qualifying relative

You must be the only person claiming your relative and you must be providing more than half of the financial support for your relative in a year.

The taxable income of relatives must not be more than $4050.

Let us have a look at some of the tax benefits which you can claim for your dependent children and relatives.

Child Tax Credit

If you have a child who is below the age of 17 years, then you have a child tax credit of $2000 to be earned as a tax deduction. Married parents who are filing joint returns can claim this credit if their income threshold is $400,000. If you are a single parent then your income threshold has to be $200,000 for being eligible to claim this credit.

Child and Dependent Care Credit

 In the US, childcare is expensive in nature and if you are paying for the childcare of your dependent children i.e. who are below 13 years of age, then you are eligible to claim Child and Dependent Care credit. This credit here can be defined as a reduction in your payable tax expressed in dollar-to-dollar terms. This credit would range from 20% to 35% of the expenditure incurred by you for childcare and this percentage will depend on your income.

Earned Income Tax Credit

This is an additional credit which can be availed by you if you are claiming your dependents. This tax credit can be availed by you in case of your self-employment income or wages are lower than a particular income level. This tax credit will depend upon another factor i.e. the number of qualifying kids you have.

Tax Credit for dependent relatives

 You are eligible to claim a tax credit for those qualifying relatives who are dependent on you. This tax credit is non-refundable in nature and you can claim up to $500 for each qualifying dependent.

Hence, deductions on the qualifying dependents are an excellent tax-saving option in the US. By these deductions, you can save a good amount of money and also can get back the tax refunds if any.