How does the coronavirus stimulus package help the NRIs in the US?

by Mounica Kota | May 18, 2020 | AGI, CARES, coronavirus, COVID - 19, IRS, US Government

How does the coronavirus stimulus package help the NRIs in the US?

The US Government has passed and signed a $2 trillion coronavirus bill otherwise known as the CARES Act. This is one of the largest emergency aid packages in the history of the country which has led to most of the taxpayers in the country receiving stimulus checks. These stimulus checks have helped in reducing the plight of the coronavirus affected Americans up to some level.

Along with the provision of all Americans receiving stimulus checks, this bill also includes $500 billion as loans for the struggling businesses, $150 billion for the local and state governments, $377 billion as grants for small businesses and $130 billion for the hospitals which are dealing with a very difficult situation as of now. To date, the IRS has sent around 140 million stimulus checks to the Americans who qualify for receiving the package.

Eligibility for receiving the Stimulus package

Major Queries

One of the major queries troubling the minds of the common people is what are the qualifying criteria for obtaining the Stimulus package? Are the NRIs living in the US eligible to obtain the Stimulus package or not?

All the US residents qualify to receive the Stimulus package as long as they possess a work-eligible Social Security Number (SSN) and can meet the income specific requirements.

a. The IRS will be determining the eligibility of an individual for the Stimulus package based on his adjusted gross income (AGI) on his 2019 tax return or 2018 tax return if not filed for 2019 yet.

b.The residents of the country who are filing their tax returns as individuals and have an AGI less than $75,000 would receive an amount of $1200 whereas residents who are married and are filing their tax returns jointly having an AGI less than $150,000 would receive an amount of $2400 as Stimulus payment.

c.An additional amount of $500 can be claimed for each dependent child who is below the age of 17 years, has been claimed in the tax returns of 2019 or 2018, and satisfies the other qualifying criterion.

d.Residents of the US who have nontaxable income such as Social Security benefits or Railroad benefits, etc. also qualify for receiving the Stimulus payment. These individuals do not need to file tax returns for obtaining Stimulus payment.

e.Residents filing tax returns as singles and having an AGI in between $75,000 and $99,000 would have their stimulus amount reduced by $5 for each $100 increase in the AGI above $75,000. Similarly, for married couples who have filed their returns jointly and have an AGI above $150,000 will have a reduction of $5 in their stimulus amount for every $100 increase in the AGI above $150,000.

Use of the Stimulus payment by NRIs in the US

a. The usefulness of the Stimulus payment obtained by the NRIs in the US depends upon various scenarios.

With the impact of the dreadful COVID-19 spreading rapidly across the US, many Americans have lost their jobs and livelihood. Businesses are being closed down and millions of workers across the country have become jobless. The Stimulus package announced by the Federal Government would include a weekly pay boost of $600 which is funded federally for the unemployed along with the regular State unemployment benefits.

However, for the NRIs in the US, there are no provisions to avail of the general state unemployment credit. So, if an NRI in the US loses his job during this pandemic it is difficult for him to manage his finances in the lockdown. The Stimulus package would be the savior for the NRIs at this point and can be used to meet the various financial needs.

b.In case an NRI in the US is into a profession where he would not be able to work from home during the corona times. NRI workers/employees from several industries such as Non-IT, retail, hospitality, restaurants, live entertainment, nightlife, etc. cannot perform their operations from home and thus, experience a partial or complete layoff from work. This would affect the livelihood and finances of the NRIs and the Stimulus checks can be used at this instance.

c.Moreover, since the pandemic COVID-19 is spreading widely across the country; an NRI might experience the situation of his family member or close relative being affected by the disease. In such a scenario, for availing the medical facilities good financial backup is necessary. The amount received by NRIs through the Stimulus package can be utilized for availing good medical facilities for their family members

References

https://www.cnbc.com/2020/04/01/whos-eligible-for-covid-19-stimulus-checks-your-questions-answered.htm

lhttps://www.forbes.com/sites/advisor/2020/04/28/real-stories-of-filing-for-unemployment-during-covid-19/#7b11b36715dd

https://www.forbes.com/sites/advisor/2020/03/25/what-you-need-to-know-about-expanded-unemployment-benefits-for-covid-19/#3e56a0436e4a

https://www.latimes.com/business/story/2020-03-27/who-qualifies-for-the-stimulus

What does the Coronavirus Stimulus Package mean for you?

by Mounica Kota | Apr 27, 2020 | CARES Act, coronavirus, Stimulus payment

What does the Coronavirus Stimulus Package mean for you?

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law by the US President on 27th March 2020. This is an economic relief package worth $2 trillion which commits of protecting the Americans from the hazardous impacts caused by the COVID-19. The Coronavirus Stimulus package would help provide some amount of relief to the Americans affected by the pandemic.

Let us talk about the different facets included within the Coronavirus Stimulus package which would help provide economic assistance to the Americans.

Stimulus Checks

Through the CARES Act, around 80% of the American population would be eligible to receive a one-time payment in the form of Stimulus Checks. The amount that would be received as Stimulus payment is mostly dependent on the Adjusted Gross Income (AGI) of the taxpayers. AGI of an individual can be obtained from Line 8b of Form 1040. It is calculated by the Gross income of an individual minus the adjustments made for eligible deductions like IRA deduction or interest on the Student loan, etc.

If you are filing your tax returns as a single filer and your AGI is below $75,000 then you are eligible to receive Stimulus payment of $1200.
In case, you are claiming a dependent below 17 years of age then you would be eligible to obtain an additional $500 for the dependent.
However, there would be a reduction in the Stimulus payment by $5 for every $100 rise in AGI above $75,000.
In case, you are married and are filing your tax returns jointly then your AGI must be below $150,000 to obtain a Stimulus payment of $2400. You can also obtain an additional $500 if you can claim a dependent below the age of 17 years.
Moreover, in this case, also there would be a reduction of $5 from the Stimulus check for every $100 increase in AGI above the $150,000.
For individual tax filers, if the AGI is above $99,000 and no dependent has been claimed by the individual then Stimulus payment will not be received by the individual.
Similarly, for married couples filing tax returns jointly if the AGI is more than $198,000 and no dependents are being claimed then the Stimulus payment would not be received.

Unemployment payments

There would be an increase in the unemployment payment for four months through 31st July 2020 by an amount of $600 per week.
This increase in unemployment payment would be applicable for those who were not qualifying for any employment including freelancers, self-employed individuals, gig workers, part-time employees, etc.

Relief on the payment of Student Loan

The employers would be able to make the payment of the Student loan on behalf of the employees in a tax-free manner. This payment of the Student loan could be up to $5250 in a year.
This implies that there would be an exclusion of the loan payment done from the income of an employee.
This provision is being implemented from the date of signing of the CARES Act into law i.e. from 27th March 2020 until 1st January 2021.

Delay in the payment of Social Security Payroll tax

A portion of the Social Security Payroll tax needs to be done by the employers and this is even applicable to the self-employed individuals. According to the provisions of the CARES Act, the employers can make a certain delay in the payment of their part of the Social Security payroll tax for the rest of the part of the year. The liability can be paid easily over the next two years.

Economic assistance for Small businesses and Self-employed individuals

By the CARES Act, the Small Business Administration has been provided with $349 billion for distributing it among self-employed individuals, independent contractors, and non-profit organizations by the Paycheck Protection Program (PPP).
The Federal Reserve Lending Program would also be receiving support in the form of $454 billion. This amount has to be utilized in providing economic support to non-profit/small businesses that have a workforce of around 500-10,000 employees. The major objective of providing aids to these Small businesses is to retain their workforce by providing them compensation and benefits.

Waiver of penalty for the early withdrawal of retirement funds

A qualified individual who has been affected by COVID-19 might need to withdraw money from his retirement funds. In such a scenario, the individual would get a 10% waiver of the early withdrawal penalty. This waiver would be applicable for up to $100K of retirement funds.
An individual would be qualified for this waiver only if

An individual, his spouse, or his dependent have been diagnosed with COVID-19.
An individual has been experiencing adverse financial conditions due to being quarantined.
If an individual’s working hours have reduced or he is not able to work for taking care of his child as child care/schools have been closed due to COVID-19.

Hence, the Coronavirus Stimulus Package is an effective initiative by the Federal Government which would help reduce the stress of Americans caused due to the pandemic COVID-19.