If you're watching Washington eagerly for signs of another stimulus check, your head is probably swimming with all of the different proposals for providing more COVID-19 money.
With so many options, it wouldn't be a surprise if you've lost track of all the possible stimulus payment proposals out there. But there's one new suggestion from Senator Martha McSally that's worth taking a look at because of the price tag alone.
Image source: Getty Images.
A married couple could get up to $24,000 in tax credits, plus more for their kids
In McSally's bill, called The American Tax Rebate and Incentive Program Act, the Arizona senator has proposed offering up to $8,000 in tax credits for couples (or $4,000 for individuals) as well as an additional $500 per dependent child. But to get the money, you'd have to fulfill certain requirements, including traveling at least 50 miles from home.
If you can meet that requirement, you'd be reimbursed for spending on food and beverages, lodging, transportation, tickets to live entertainment events, and expenses related to attending conferences.
McSally isn't just proposing this tax credit for 2020, either. She wants to provide the opportunity for Americans to get money back for their trips through 2022. Since these tax credits would be available for three years, they could be worth up to $24,000 for married joint filers who max out their credits each year -- or more for those who have children too.
Tax credits reduce your tax due on a dollar-for-dollar basis, so can be far more valuable than deductions. However, McSally has proposed making the credit non-refundable, which means it can reduce taxes due but you won't get money back if your credit is worth more than your tax liability. That means the credit would primarily benefit those who both have the cash to shell out for vacations valued at $8,000 or more per couple and who have enough tax liability to get their money back in full.
One of the biggest beneficiaries of McSally's bill, however, would be the tourism industry, which has been hit hard by coronavirus and which may face ongoing economic trouble as many Americans remain frightened of taking a vacation or attending large group events.
Does McSally's bill stand a chance of becoming law?
McSally's proposal is a generous one with a hefty price tag, although it doesn't provide any relief for those facing immediate financial struggles who are worried about how they'll keep the lights on.
Still, it may be attractive to President Donald Trump, who has already spoken out in favor of a smaller $4,000 tax credit for travel and dining and who has also expressed a willingness to offer a "generous" second stimulus for American families. The President has repeatedly expressed his desire to get people out and get the economy up and running, and providing thousands in tax credits available only for those who spend money would be a powerful way to do that.
There are likely to be objections from both the right and left, though. Republican lawmakers will almost assuredly object to the cost of such a large stimulus payment, while Democrats are likely to argue that its benefits would primarily go to those who are already doing fairly well financially.
Still, because the proposal could help the hard-hit hospitality industry and potentially reduce unemployment, there are also aspects of it that could be attractive to those on both sides of the aisle.
What should you do if you don't get more stimulus money?
Because McSally's bill joins a long list of others, it could very well get lost amid myriad stimulus suggestions and not gain any real traction.
In fact, that's what seems to be happening to most plans for more COVID-19 money. Even the HEROES Act, which passed the House of Representatives, is almost assuredly not going to gain the majority support it needs to pass the Senate.
With a very tight deadline for authorizing more stimulus money and no signs of consensus, there is a real chance Americans will see no more help from Washington at all. And you need to be ready for that, which means planning for how you'll cover your costs during the 2020 recession if no additional aid comes. Some of the steps you can take include:
- Applying for federal or state assistance, including unemployment benefits if you are out of work
- Understanding and taking advantage of the other protections available under the CARES Act, including paid family and sick leave, protection from eviction and foreclosure for millions of Americans, and tax credits for businesses and independent contractors
- Refinancing debt at today's low interest rates to free up cash in your budget or exploring low-interest financing options if you need short-term cash
- Considering a 401(k) withdrawal as a last resort if you need short-term cash (or if you have plans to repay what you've taken out of your retirement accounts)
- Creating a payment plan with your creditors or landlord if you have insufficient income coming in to cover your bills
- Exploring side gigs you can still do safely during the COVID-19 crisis
- Reworking your budget to reduce unnecessary spending and free up cash for other priorities
- Shoring up your emergency fund in case of an income reduction or period of unemployment
Finding ways to make yourself more financially secure, regardless of what Washington does, could be a far better use of your time than watching eagerly for a second stimulus payment that may not ever come.
