Do You Qualify for the HEALS Act?

Arin V., EA , MBA

Arin is an Enrolled Agent (EA), authorized to represent taxpayers in front of the IRS, and holds a BA and MBA (Management) degree from California State University, Northridge.

Due to the extraordinary developments in the first half of 2020 as well as the hardships experienced by many Americans as a result of the COVID-19 pandemic, fresh after the CARES Act provided a tax stimulus check to many Americans, the United States Senate is now proposing the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act.

Similar to the CARES Act, the HEALS Act, should it pass through Congress, will provide a second $1,200 stimulus check for U.S. citizens and permanent residents (green card holders), regardless of whether they live in the U.S. or overseas. The income limits for the HEALS Act remain the same as for the CARES Act – individual filers will receive the full $1,200 if their income is up to $75,000, and above that level, they would still receive a partial payment, provided their income does not exceed $99,000. Joint filers will receive $2,400 if their income is up to $150,000, and above that level, they would still receive a partial payment, provided their income does not exceed $198,000.

Additionally, for each dependent, filers will receive a $500 payment (up to a maximum of three dependents). However, unlike the CARES Act, there would be no age limit for dependents.

Also, as part of the HEALS Act, unemployment benefits will still be enhanced, but would drop to an additional $200 per week rather than $600 per week. These unemployment benefits would be paid until September 30, 2020, after which the payment would be replaced with a payment covering 70 percent of a worker’s previous wages, when combined with regular state benefits. The method of calculating the 70 percent replacement wage depends on the state of residence, but nonetheless, the payment will be capped at $500 per week.  

The tax stimulus check offered by the HEALS Act would not be taxable, as it would not be treated as income. Therefore, if you receive this payment, you would not be liable for paying any tax on it when filing your 2020 tax return.

It is important to note once again that the tax stimulus checks are available to Americans who live in the U.S. as well as U.S. expats living outside the U.S. Therefore, if you are an American expat and have not filed your 2018 or 2019 U.S. tax returns, now would be as good a time as any to do that, given that you would potentially be leaving money on the table by not filing. If you have not filed in the last two years, contact us today to file your U.S. tax return so you can qualify for this upcoming tax stimulus check in the event that it is passed by Congress.