As you might be aware, in late December 2020, the president signed into law another round of economic stimulus. In March 2020, we had the CARES Act. Now we have the Consolidated Appropriations Act of 2021.

The legislation is over 5000 pages. And if you’re a woman in your early to mid career in the tech industry, as an employee, almost none of this legislation affects you (directly). (If you own a business, as opposed to being an employee, then there’s more of interest in the bill. I just won’t cover it here.)

The pieces that could affect you are small, but still useful. See what you might get out of this legislation below.

Maybe you won’t lose unused FSA money.

You know the way FSAs—both healthcare and dependent care—usually work, right? During open enrollment, you decide to put in a certain amount of money, say, $2000, over the course of the next year. If you don’t use all that $2000 in that following year, you lose it.

Normally this “use it or lose it” feature isn’t too much of a problem. But for 2020, it totally was. Because people stopped going to the doctor, and they certainly pulled their kids out of childcare. So, in November 2019, they decided to put $2000 into their FSA…and then had no opportunity to spend it in 2020. Which means they were heading for not using it, and therefore losing it.

This legislation had made it acceptable for your company to change their FSA program to allow you to:

  • Roll over unused money from 2020 to 2021, and then again from 2021 to 2022
  • Change how much you contribute to your FSA mid-year. So, if you chose a certain amount to contribute to your 2021 FSA in your end-of-2020 open enrollment, you can now change that amount mid-2021, instead of being stuck with it for the whole year.

Please note that the government has said companies may allow these changes, but there’s no guarantee your company will. If you don’t hear from your company about such changes, be sure to ask!

You can still easily get a (small) tax reduction for cash contributions to charity.

The CARES Act in early 2020 introduced a new way to get a tax benefit if you contribute to charity: If you donate $300 in cash (as opposed to, say, donating stock), you could deduct that $300 without having to itemize your deductions. That just means you can get that tax benefit regardless of what you do about your deductions: itemize or take the standard.

Most people haven’t itemized since the Tax Cut and Job Act of 2017 was passed, because it made the standard deduction way higher. (Historically, the only way to reduce your taxes by cash charitable donations was to itemize your deductions.)

This new legislation continues this $300 deduction for 2021, but now also allows couples filing a joint tax return to deduct up to $600 (aka, $300 x 2 people). If your top tax rate is 35%, then a $600 contribution will save you $210.

This is a small amount of tax savings, but especially if you don’t itemize your deductions, this is the easiest way to get a tax benefit for charitable contributions. If you donate cash to charity, be sure to claim it in your taxes this way. (Donating “appreciated stock” might still be the tax savvier way to donate, but I’m more concerned that you give than you optimize taxes in the process.)

If you have federal student loans, you need to resume repaying soon.

The CARES Act also suspended payments on federal student loans, referred to as the federal student loan “forbearance” program: You don’t make any payments, and you don’t accrue interest or penalties.

This program was extended within 2020, but this new stimulus package didn’t extend it again. So, as of now, the program is scheduled to expire at the end of this month, January. Which means you’ll have to resume repaying your federal student loans in February.

Maaaaaybe you’ll get $600 cash. But only if you earned under $75k.

This stimulus package is giving $600 to each person who made under a certain income in 2019 or 2020. ($600 to an individual, $1200 to a couple, with $600 more for each kid.)

If you made under $150,000 (if you filed your taxes Married Filing Jointly) or $75,000 (if you filed your taxes Single) in 2019 or 2020, you will get this money. If you met that requirement in 2019, you might, in fact, already have your money. If you met that requirement in 2020, then you won’t receive the money until you file your 2020 taxes.

(If you are interested in learning (way) more, check out this blog post from a financial planning industry powerhouse. This bill is huge, so thorough coverage of it is similarly expansive. Consider yourself warned!)

There. That’s it! Happy new year. May the vaccine be ever in your favor.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.

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