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The Consolidated Appropriations Act is now law.  Many Americans have closely followed updates about the Covid stimulus check status.  Initially, Congress passed a $600 stimulus.  President Trump pushed back and asked for $2000; however, at this time it does not look like the Senate will approve $2000 stimulus checks.  It is anticipated $600 checks will begin to distribute as early as next week.  No action will be required of tax payers and their dependents who qualify to receive this $600 stimulus relief payment.  Like the last round of stimulus checks issued with the CARES Act, a phaseout occurs between $75,000 – $150,000 at which point taxpayers will either receive a reduced amount or none at all.      

Recovery rebate: How it works

  • The recovery rebate is a 2020 credit which will be paid in advance of 2021 tax filing deadlines.  It is based on 2019 income.  If taxpayers do not receive a stimulus check, they may qualify for a true up at tax time.  
  • If the taxpayer income is not phased out, they and their spouse, and dependents each qualify for the $600 stimulus.  Example: Mark is single and has a AGI of $50,000, he qualifies for a $600 stimulus check.  If Mark is married to Sally and their combined AGI is below $150,000 they will each qualify for $600 or 2 x $600 = $1200.  If Mark and Sally have 5 kids under age 17, they will receive a check totaling 7 x $600 = $4200.  
  • What happens to our example couple Mark and Sally if they have another baby in 2020?  They will get their $4200 check for all family members based on their 2019 household and the new child born in 2020 will qualify them for a $600 true up on their 2020 taxes.   

Affects on Healthcare Plans

FSA (Flexible Spending Accounts) is a type of savings with tax advantages.  FSA’s are established for employees by their employers, which allow employees to make payroll contributions pre-tax lowering taxable income to an account they can use for paying qualified healthcare costs.  A key disadvantage to the FSA is the annual use it or lose it guidelines and insurance premiums do not qualify for use of FSA funds (Kagan, 2020).  Under the Consolidated Appropriations Act, FSA will be allowed to roll over from 2020 to 2021 and if still unused they can again roll over from 2021 to 2022.  

Like FSA’s an HSA (Health Savings Account) is a saving account strategy which allows employees to contribute pre-tax, thereby reducing their taxable income, and use the funds to pay for qualified healthcare cost.  However, to qualify for an HSA the employee must have a High Deductible Health Plan in place (Health Savings Account (HSA) – Glossary).  HSA traditionally have not allowed mid year changes to contributions, but this will not be the case in 2020 thanks to the Consolidated Appropriations Act guides, but be sure to check with your employer to ensure they adopted these rules for your healthcare plans.        

Education changes with Consolidated Appropriations Act

There will be a significant benefit to both employers and employees who wish to take advantage of a max benefit of $5250/year per student tax free student loan payment through 2025.  Highly compensated employees will not be discriminated against with respect to this tax free student loan payment.  With the Consolidated Appropriations Act, this is how it may work to the advantage of both the employer (ER) and employee (EE):

  1. ER provides $5250 tax free student loan payment either directly to the educational provider or the EE.  If you are the ER, be sure to obtain proof of educational payment to qualify for deductions.
  2. EE receives $5250  tax free student loan verses taking a $5250 raise.  This strategy allows the EE to receive funds which are not subject to tax.   

Additional benefits of this stimulus

Residential energy efficiency now has an extended tax credit through 2024.  Unemployment has been extended 11 weeks and will include an additional benefit of $300/week on top of original benefit.   the Pandemic Unemployment Assistance allows for unemployment benefits not ordinarily provide to a self employed individual.  In 2021 and 2022 (2020 is not included), business meals, but no entertainment will be 100% deductible, this represents a 50% increase.  PPP loans phases I and II are ramping up to include a new wave of qualifying businesses.  Those applying will first need to request a loan through the PPP phase I prior to advancing to PPP phase II.  Employee limits have been reduced from a max of 500 EE’s down to 300 EE’s for PPP II.  The food service industry now qualifies for 3.5X monthly payroll instead of 2.5X as established for other businesses.  More details to follow for these additional benefits.   

About the Author

Author, Marianne Martini Nolte, Certified Financial Planner ™ practitioner, provides fee-only, fiduciary, independent financial services.  Her firm, IMAGINE FINANCIAL SERVICES (IFS) is a registered investment advisor offering advisory services in the State of California and in other jurisdictions where exempted.  Marianne’s focus is serving women and generations X, Y, and Z.  This article is intended as a high level view.  

All written content is for information purposes only. Opinions expressed herein are solely those of IFS, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness. 

For more in depth information, please reach out:

Marianne Martini Nolte, CFP®

Imagine Financial Services 



Phone, (760) 472-5155


Health Savings Account (HSA) – Glossary. (n.d.). Retrieved December 29, 2020, from

Kagan, J. (2020, August 28). Flexible Spending Account (FSA). Retrieved December 29, 2020, from