On March 29, 2021, the Internal Revenue Service (IRS) made an additional update regarding the 2020 tax year. This announcement follows the original extension of the federal income tax filing due date for individual taxpayers to May 17, 2021, and now specifies that the extension applies to IRA contributions and filing certain claims for refund. Click here for full details on the IRS website.
Also in recent weeks, Congress passed another COVID-19 stimulus package and President Biden signed it into law on March 11, 2021. This was the third stimulus package passed in the last 12 months. The American Rescue Plan Act allocates funding for COVID-19, healthcare, education, small businesses, agriculture, transportation, unemployment, grants for restaurants, and tax credits as part of the $1.9 trillion U.S. stimulus package. We have compiled a summary of some of the benefits as applicable to individuals.
Key Provisions of the American Rescue Plan Act
Unemployment Benefits: This was a heavily debated part of the bill. The dollar amount went back and forth and was finalized at $300/week as a jobless aid supplement. This benefit will continue through September 6, 2021. An additional provision makes the first $10,200 of unemployment benefits to be tax-free in 2020 for households making $150,000 or less, rather than taxable under the previous bills.
Stimulus Checks: The bill provides checks in the amount of $1,400 to those making $75,000 or less as individuals and $150,000 or less as married couples. The checks begin to be phased out as income increases up to $80,000 (individuals) and $160,000 (married couples) before phasing out completely.
Child Tax Credits: These credits were increased from $2,000/child to $3,000/child for children between the ages of 6-17. The credits were also increased from $2,000/child to $3,600/child for children 5 and younger. These credits will begin to phase out for parents earning over $75,000 (single filers) and $150,000 (married filing jointly).
Heath Insurance: A two-year, temporary, subsidy increase to the Affordable Care Act will decrease insurance costs for those already in the program and cap the amount of a household's income that can be paid for health insurance.
The team at Allegiant will bring you more updates regarding this law or the tax deadline as information becomes available.
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