• elitetaxadvisory21

The American Rescue Plan: What does it mean for you?

Updated: Mar 15, 2021

The American Rescue Plan was signed into Law on March 11th, 2021 by President Joe Biden, which provides significant help to Americans.

Round three of stimulus payment will be sent to qualifying taxpayers in the amount of $1400 per individual filed on each tax return.

If you have already filed your 2020 return the IRS will use your 2020 tax information to determine eligibility and amount of stimulus payments. Where a 2020 return has not yet been filed, the IRS will use your 2019 tax information to establish your eligibility.

Payments will be sent via direct deposit, checks and debit card to the last address you provided on your most recent tax return filing.

An additional change is that there is no restriction on the age of the dependent. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.

The Child Tax Credit has been expanded, from $2,000 to $3,600 per child, which is a refundable credit to taxpayers. Taxpayers with Adjustable Gross incomes of $75,000 (single), $112,000(Head of Household and $150,000(Married filing Jointly), will qualify for the full amount of the credit.

Unemployment benefits-If you received unemployment benefits in 2020, under the American Rescue Plan the first $10,200 of 2020 unemployment benefits is now nontaxable. Previously you were required to pay federal taxes on the full amount of any unemployment benefit received. The IRS will work with software providers to implement this change so if you have not filed yet, stay tuned for updates on this.

The IRS has recommended that taxpayers do not file amended returns at this time but stay tuned as the full guidelines of the act are implemented and rolled out to taxpayers.

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