CORONAVIRUS

$4,000 credit: can I get it if I've already received stimulus check?

An 'Explore America' travel tax credit has been proposed in the US, in a bid to boost a US tourism industry badly affected by the coronavirus crisis.

$4,000 Covid-19 credit: can I get it if I've already received stimulus check?
JUAN MABROMATA AFP

Under the CARES Act, a $2.2tn coronavirus relief package passed in March, millions of stimulus checks of up to $1,200 have been sent out to eligible Americans as people in the US battle to cope with a financial crisis that has left unemployment in the country at 13.3% - 10% higher than in February, before Covid-19 hit.

Although the current jobless rate actually represents a slight fall from April’s percentage of 14.7%, figures released by the Department of Labor on Thursday nevertheless confirmed that there have now been over one million first-time unemployment-benefits claims for 13 consecutive weeks in the US.

CARES Act stimulus money not enough for many Americans

Several polls carried out in April showed that many Americans feel they are going to need more relief money from the US government, with 64% of respondents to a survey conducted by MarketWatch saying that their CARES Act stimulus check, officially known as an Economic Impact Payment, would cover their day-to-day costs for less than three months.

Meanwhile, a study by Columbia University’s Center on Poverty and Social Policy has found that poverty in the US could have risen from 12.5% to 16.3% without the first round of checks, and has warned: “If high unemployment rates persist beyond July 2020, additional income support will be needed" to stop a spike in the number of Americans experiencing economic hardship.

The CARES Act has also been providing a weekly $600 boost to unemployment benefits, but this runs out at the end of July.

HEROES Act includes second stimulus check, but bill resisted by Senate Republicans

Passed by the House in May, the HEROES Act proposes extending these extra benefits and giving Americans a second stimulus check of up to $1,200, but the $3tn relief package has met with resistance from Republicans in the GOP-controlled Senate. A relief bill of any description does not look like being passed until at least July, and it remains unclear whether or not a second check would be included.

Treasury Secretary Steve Mnuchin told a Senate hearing earlier this month that President Donald Trump’s administration is open to distributing a second batch of stimulus checks, saying: "I think we're going to seriously look at whether we want to do more direct money to stimulate the economy.”

"Less rescue and more incentive" - White House adviser

Last week, meanwhile, Trump responded to questions about the possibility of another check by declaring, per CNET: "I think we're working on something that's going to be very dramatic, very good."

However, Forbes notes that the president looks to be prioritising raising employment over sending out direct financial aid. "The Trump administration appears most focused on stimulating the economy through job growth," the outlet says. "This includes a focus on manufacturing jobs, infrastructure spending, a payroll tax credit, a return-to-work bonus and other related incentives."

"I think we need less rescue and more incentive," White Houser adviser Larry Kudlow told Fox Business two weeks ago.

'Explore America' travel tax credit proposed

One idea floated by Trump that ties in with this approach is an ‘Explore America’ travel tax credit that would bid to kick-start a US tourism industry that has been badly affected by the pandemic - so much so that travel-related businesses accounted for almost 40% of the 20.7 million jobs lost in the country in April.

Trump put forward the idea at a White House round table with restaurant executives and industry leaders in May, saying: "Create an 'Explore America' - that’s 'Explore', right? 'Explore America' tax credit that Americans can use for domestic travel, including visits to restaurants. That’s a big deal.”

According to the US Travel Association (USTA), an ‘Explore America’ scheme should allow households in the US to claim back 50% of travel expenses incurred within the country on things such as flights, hotels and meals, up to a maximum of $4,000.

"Qualified travel expenses should include any expense over $50 that is incurred while traveling away from home in the US, with explicit reference to the expense of meals, lodging, recreation, transportation, amusement or entertainment, business meetings or events, and gasoline," says the USTA.

An ‘Explore America’ credit - which, it has been proposed, would run until the end of 2021 - would "encourage domestic business and leisure travelers to travel" and "reduce the time it takes to get to full recovery" in the industry, the USTA adds.

Can I get $4,000 credit if I've already received stimulus check?

There appears to be no reason why one should have any bearing on the other; they are two very different schemes.

'Explore America' has the potential to significantly boost a household’s finances, but it wouldn't work in the same way as a stimulus check. Rather than being a direct cash injection, a tax credit is a sum of money taxpayers can deduct from the tax they owe their inland revenue. Governments often use such credits to incentivise certain economic activities, like paying for child care or saving for retirement.

It therefore seems highly unlikely that a person’s eligibility to claim a travel tax credit would be impacted by having received a CARES Act stimulus check.

Furthermore, if another stimulus check is included in a future relief package passed by Congress, those who qualified for the first Economic Impact Payment can also reasonably expect to be included in the following round. Indeed, the HEROES Act actually broadened the scope of eligibility for its proposed second check.

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