American Rescue Plan Act of 2021 (Third Stimulus Payment)
UPDATE (03/10/2021): It’s official. This bill just passed both House and Senate, now headed to President's desk to be signed into law.
A few other important details I failed to mention in my first post. For those that received unemployment benefits last year, you’ll want to amend your taxes if you have already filed. With this new legislation, the IRS will waive taxes on the first $10,200 of unemployment benefits for most individuals, which could mean a few hundred dollars (if not thousands) back to your wallet.
The next round of this stimulus package will be extremely beneficial. The total will be $1,400 per taxpayer(s) and each of their dependents. Filers will receive the $1,400 as long as they meet the following income threshold according to the latest updates:
Married Filing Joint: *$150,000*-$160,000
Single: *$75,000*-$80,000
Head of Household: *$112,500*-$120,000
*Below this threshold* = FULL $1,400
Want to read it yourself? Click here for the bill:
According to the bill, the stimulus payments will be based on your 2019 or 2020 annual income, whichever is the most current on file with the IRS.
It's imperative that you HOLD off from filing if you believe your 2020 tax return will be much higher as you may qualify for less money. In this case, it pays to delay.
Another critical part of the bill is the Child Tax Credit adjustments that will have one of the BIGGEST enhancements when you file your taxes next year in 2022.
Currently, the Child Tax Credit is $2,000 per dependent child and is lowered for teenagers over 17 years old.
If this bill becomes law, the Child Tax Credit will almost double in value. ARP 2021 will adjust the Child Tax Credit to:
$3,600 per dependent under six years old and $3,000 for those between 6-17 years old. Additionally, the plan would make the credit payable with monthly installments of $300 and $250, respectively, rather than just once a year.
There's also positive news for those affected by layoffs, with the Pandemic Emergency Unemployment Compensation continuing to pay benefits until August 2021. There's also health care coverage relief and even additional opportunities for small businesses to receive grants and much-needed help for those affected.
The bill also includes:
$350+ billion for state, local, and Tribal governments, many of which have experienced a reduction in tax revenue as a result of the pandemic.
Over $125 billion for K-12 schools and $40+ billion for colleges and universities.
More than $75 billion for COVID-19 testing and support of the vaccine rollout, including funds for hospitals, public health agencies, and biomedical research.
However, with all of that said, the part that will be most helpful for families is the additional recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent for 2021 in addition to the enhancement of the Child Tax Credits.
To recap;
-if you're married filing jointly, you will receive $2,800 as long as your income is below $150,000, based on your most current return filed.
-if you're single, you will receive $1,400 as long as your income is below $75,000, based on your most current return filed.
-a family of four could potentially receive up to $5,600 plus an additional Child Tax Credit of $7,200* ($3,600 for children under six and $3,000 for children under 18) for a total of $12,800.
*Half the amount of the Child Tax Credit would be sent out as monthly direct payments that could begin in July. That's a very generous amount that can really help families in need right away.
Again, this is a bill...not the law, yet. The House version of the ARP 2021 will now go to the Senate, which is expected to vote on the package before 03/14, which is when a $300-per-week federal supplement to unemployment checks is scheduled to expire. More to come soon.
