Stimulus Package Update
The American Rescue Act was signed into law last week and we wanted to inform all of you about some of the key provisions that may impact your taxes for 2021 and potentially for 2020.
DETAILS OF THE MOST COMMON QUESTIONS THAT WE ARE GETTING INCLUDE THE FOLLOWING:
- 2020 NONTAXABLE UNEMPLOYMENT $10,200:
- For households making $150,000 or less.
- If you make even $1 more, you do not qualify.
- If you are married and you both received unemployment, the first $10,200 you each received will be nontaxable.
- If you have already filed for 2020, the return can be amended after 4/15/2021.
- THIS IS FOR 2020 ONLY.
- 2021 INCREASED CHILD TAX CREDIT – 0-5-year-old children are increased to $3,600, and 6-17-year-old children are increased to $3,000. The previous limit was $2000.
- This will be on the 2021 tax return – prepared in 2022.
- Income limits for full credit:
- Married $150,000 or less
- HOH $112,500 or less
- Single $75,000 or less.
- The bill provides that half of the credit will be paid out monthly from July-December, 2021
- 2021 3RD STIMULUS PAYMENT $1,400 EACH:
- For all ages, including dependents over age 17.
- Income limits:
- Married $150,000 – $160,000 (previously $150,000 – $200,000)
- HOH $112,500 – $120,000 (previously $112,500 – $146,000)
- Single $75,000 – $80,000 (previously $75,000 – $100,000)
- If your income is too high on your 2020 tax return, you may still qualify for the stimulus on your 2021 return (filed in 2022) if your income goes down (see income limits above).
- Stimulus payment will begin to be sent out on 3/13/2021.
OTHER PROVISIONS IN THE BILL INCLUDE THE FOLLOWING:
- Extension of Pandemic Unemployment Assistance until September 6th with the $300 boost;
- Increased and fully refundable Child Tax Credits and Dependent Care Assistance Credits for the 2021 taxable year;
- An increased employer-provided dependent care assistance exclusion;
- A five-year Cancellation of Debt exclusion for student loan forgiveness;
- An expansion and increase of the Earned Income Tax Credit;
- Tax relief for excess advanced Premium Tax Credits received in 2020, and an increase in the Premium Tax Credit for 2021 and 2022; and
- Six months of free COBRA benefits.
- Extension and expansion of the Employee Retention Credit;
- Extension and expansion of the employer credits for paid sick and family leave benefits;
- Credits for providing subsidized COBRA benefits; and
- Restaurant revitalization grants to cover restaurant business losses.
The full bill can be reviewed at the congressional link below:
Stay safe out there and thanks again for your trust in us!!
Lake Stevens Tax Service
DISCLAIMER: This message is not intended nor can it be relied upon as legal or tax advice and is not an agreement to engage in any type of tax filings, compliance, or advisory service.