The second stimulus package (Consolidated Appropriations Act, 2021) includes $10 billion to provide immediate assistance to child-care providers and $250 million for the Head Start program. Who is in line for this aid? There are multiple recipients, as outlined below.
Child-care providers can use the grants to stabilize their businesses: making payroll, purchasing sanitizing supplies and even spending on fixed costs such as rent. Lawmakers allocated $284 billion through the Paycheck Protection Program, specifically noting that child-care programs would be eligible for these funds.
The package also makes updates to the child tax credit, making it more accessible to people whose incomes fell during the pandemic.
In addition, the package contains at least three provisions related to food stamps. The monthly benefit for SNAP will increase by 15% through June 30, 2021. Qualification rules remain complex, but people collecting unemployment benefits will have an easier time qualifying. Also, college students will have an easier time qualifying. This is complicated, but people who are eligible for a federal or state work-study program or who have an expected family contribution of zero will likely qualify.
The package expands the pandemic-EBT program to families with children under age 6 who receive food stamps. The program now provides money to low-income families with school-age children to replace subsidized meals they would have received in school.
Paid family and sick leave has been partially extended, particularly for the self-employed. Self-employed workers can continue to claim a tax credit — created under earlier legislation — for a certain amount of sick days or time taken off to care for children or family members, under certain conditions. The package doesn’t add any days but lets those workers take any unused time through March. They also can now choose to use their 2019 income instead of 2020 to compute the credit, if that works to their advantage.
Under earlier legislation, small and midsize employers were required to temporarily provide paid sick and family leave to workers, up to certain limits and for specific coronavirus-related reasons through the end of the year. The new act doesn’t extend this but does allow an eligible employer to be fully reimbursed for the costs of unused leave through March, in the form of a refundable payroll tax credit.
The New York Times quoted Vicki Shabo, senior fellow on paid leave strategy at New America, a Washington-based think tank: “It essentially returns workers to the position they were in prior to the pandemic with respect to access to legally required leave, but offsets costs for employers with fewer than 500 employees who choose to continue to follow the policy.”
This is just a review of complex provisions: The act itself runs over 5,000 pages! For more on how these provisions might affect you or your business, give us a call.
As we have been doing with all coronavirus legislation and IRS and SBA guidance during these past several months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here.
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