COVID-19 and Direct Payments to Individuals: Comparison of Recent Proposals for a Second Round of Payments (IN11513, Version 3, Updated October 2, 2020)

Summary

Insight IN11513, Version 3, of the Congressional Research Service, updated October 2, 2020, comparing proposals for a second round of direct payments to individuals. The CARES Act payments, signed March 27, 2020, were $1,200 per eligible individual ($2,400 for most married couples) plus $500 per eligible child. The proposals are the Heroes Act (H.R. 6800), passed by the House on May 15, 2020; the American Workers, Families, and Employers Assistance Act (S. 4318), introduced July 27, 2020 as part of the HEALS Act; and the revised Heroes Act (H.R. 8406), passed by the House on October 1, 2020. All would structure payments as a one-time refundable tax credit for 2020.

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INSIGHTi

COVID-19 and Direct Payments to
Individuals: Comparison of Recent Proposals
for a Second Round of Payments

Updated October 2, 2020
The CARES Act (P.L. 116-136), signed into law on March 27, 2020, included direct payments to
individuals. These payments, most of which have already been issued, were equal to $1,200 per eligible
individual ($2,400 for most married couples), with an additional $500 per eligible child. The payments
phase down for higher-income households. (For more information on the CARES Act payments, see the
CRS resource guide.)
The following subsequent legislative proposals would provide a second round of payments:
 the Heroes Act (H.R. 6800), which passed the House on May 15, 2020;
 the American Workers, Families, and Employers Assistance Act (S. 4318), which was
introduced in the Senate on July 27, 2020 (S. 4318 is one component of what has been
referred to as the HEALS Act); and
 the “revised version” of the Heroes Act (H.R. 8406), introduced on September 29, 2020.
The House passed the revised version of the Heroes Act on October 1, 2020, as a House
amendment to the Senate amendment to H.R. 925.
Table 1 provides a summary of the major provisions of these proposed second rounds of payments.
Although these proposals differ, there are several major similarities. First, as with the CARES Act
payments, all the proposals for a second round of payments nominally structure them as a new one-time
refundable tax credit for 2020 that would be automatically issued this year, as opposed to 2021 (when
taxpayers will file their 2020 income tax returns). The IRS would determine payment amounts based on
2019 tax return data, or if unavailable, 2018 income tax return data. Second, recipients of Social Security,
Supplemental Security Income (SSI), Railroad Retirement, or certain VA benefits who have not filed a
recent federal income tax return would be eligible to receive these payments automatically. Third, as with
any tax credit, these payments would not count as income or resources for a 12-month period in
determining eligibility for, or the amount of assistance provided by, any federally funded public benefit
program. Finally, these payments would not be taxable.

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IN11513

CRS INSIGHT
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Table 1. Major Provisions of Direct Payments in Recent Legislative Proposals
First Round of Proposed Second Round of Direct Payments
Payments in the
CARES Act Heroes Act HEALS “Revised” Heroes Act
(P.L. 116-136) (H.R. 6800) (S. 4318) (H.R. 8406)

Payment $1,200 payments for Same as CARES Act Same as CARES Act Same as CARES Act
amount eligible individuals
($2,400 for married
joint filers).

Additional $500 for Additional $1,200 for each Additional $500 for each Additional $500 for each
each dependent child dependent, including older dependent, including older dependent, including older
under 17 years old (as children and adult children and adult children and adult
defined for the child dependents, up to a dependents. dependents.
credit). maximum of three
dependents.
Phaseout Total payment amount Same as CARES Act Same as CARES Act Same as CARES Act
phases out by 5% of
adjusted gross income
over thresholds:
$75,000 singles
$112,500 heads of
households
$150,000 married joint
filers

Eligibility Everyone except: Same as CARES Act Everyone except: Same as CARES Act
 Nonresident  Nonresident aliens
aliens  Dependents of other
 Dependents of taxpayers
other taxpayers  Individuals who died
before January 1, 2020
 Incarcerated
individuals as defined
under 42 U.S.C.
402(x)(1)(A) a

Dependents eligible for Dependents eligible for Dependents eligible for Dependents eligible for
$500 amount are $1,200 payment are those $500 amount are those $500 payment are those
those defined under defined for the dependent defined for the dependent defined for the dependent
IRC §24(c) for the exemption. In other words, exemption. In other words, exemption. In other words,
child tax credit. all qualifying children and all qualifying children and all qualifying children and
qualifying relatives. qualifying relatives. qualifying relatives.
Congressional Research Service 3

ID All eligible individuals All eligible individuals and Same as CARES Act All eligible individuals and
requirement and qualifying children qualifying children must qualifying children must
must have a work- have a SSN or ITIN for the have a SSN or ITIN for the
authorized Social household to receive the household to receive the
Security Number payment.b payment.b
(SSN) for the
household to receive a
payment.b

Households in which
at least one otherwise
eligible individual does
not have an SSN—and
instead uses an
Individual Taxpayer
Identification Number
(ITIN)—are ineligible
for the payments.
(Exception for certain
married members of
the Armed Forces.)

ITINs are issued by the
Internal Revenue
Service (IRS) to
taxpayers who are not
eligible for a SSN so
that they can comply
with federal tax law.
ITIN users include
many noncitizens who
are unlawfully present
or unauthorized to
work in the United
States.
Offset and The CARES Act Same as CARES Act, except Same as CARES Act Same as CARES Act, except
Reduction for payments cannot be these payments cannot be these payments cannot be
Past-Due offset (reduced before offset for child support offset for child support
Debts being issued) to satisfy debt. debt.
certain debts owed to
governmental agencies,
such as tax debts or
unemployment
compensation debts.
These payments can be
offset for child support
debt.
In addition, these payments In addition, these payments In addition, these payments
would, with certain would be generally exempt would be generally exempt
exceptions, be exempt from from debt collection from debt collection
debt collection actions, such actions, such as garnishment actions, such as garnishment
as garnishment or levy, that or levy, that occur once or levy, that occur once
occur once payment are in payments are in accounts payments are in accounts
accounts (i.e., after (i.e., after payments are (i.e., after payments are
payments are issued). issued). issued).

IN11513 · VERSION 3 · UPDATED
Congressional Research Service 4

Modifications NA Yes Yes No
to CARES Act
payments

Sources: CRS analysis of H.R. 8406 as introduced September 29, 2020, S. 4318 as introduced on July 27, 2020, the
Heroes Act (H.R. 6800) as passed by House on May 15, 2020, and the CARES Act (P.L. 116-136).
Notes: Estates and trusts are ineligible to receive the CARES Act payments, and would also be ineligible under the three
proposals. Under all three proposals, the payments would be extended to the U.S. territories in a manner similar to
CARES Act payments.
a. These individuals would also be ineligible to receive these payments as a tax credit claimed on their 2020 income tax
returns if they were considered incarcerated (as defined under 42 U.S.C. 402(x)(1)(A)) for all of 2020.
b. Adoption taxpayer IDs (ATINs) could also be used for adopted children.

Author Information

Margot L. Crandall-Hollick
Acting Section Research Manager

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IN11513 · VERSION 3 · UPDATED

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