President Biden signed the American Rescue Plan into law Thursday, March 11, 2021. The $1.9 trillion economic stimulus plan contains a number of pieces of legislation aimed at supporting individuals through the continued Coronavirus pandemic.
Direct Payments
Stimulus checks are a big part of this latest bill. Individuals who earn less than $75,000 and married couples earning less than $150,000 will receive a direct payment of $1,400 per person. Additionally, for every dependent, an individual or married couple will receive an additional $1,400.
The upper limit for eligibility is lower this time, however, with the cutoff at $80,000 for individuals and $160,000 for married couples. Those earning between $75,000 and $80,000 or couples earning between $150,000 and $160,000 will see a gradual decrease in payments the closer to the cutoff they are.
We recommend you take the time now to ensure that you are set up with direct deposit with the IRS to make this and any other payment from the IRS more efficient in the future. If you do not wish to have direct deposit set up with the IRS and you’re eligible for stimulus funds, you can expect a paper check mailed to the address the IRS has on file for you.
Unemployment Benefits
The $300-per-week federal supplement and other unemployment programs are now extended through early September. Additionally, the first $10,200 of unemployment benefits received is exempt from Federal tax in 2020 for households earning less than $150,000.
Health Insurance Updates
The bill makes changes to the premium tax credit for 2021 and 2022. It changes the affordability percentages used in calculating the premium tax credit. Additionally, taxpayers who received premium tax subsidies in 2020 and earned too much income will not be required to pay them back.
Child Tax Credit
For 2021, the credit has increased from $2,000 to $3,600 ($3,000 if age six or older) and is now fully refundable. Additionally, 17-year-old children are now eligible. The $1,000 increase is phased out with income between $75,000 and $200,000 (filing as single); $150,000 and $400,000 (married, filing jointly). Throughout 2021, half of the credit will be distributed to taxpayers by direct payments. The start date for this has not been determined yet.
Paid Sick and Family Leave Credits
This credit is now extended through September 30, 2021, and eligible wages have increased from $10,000 to $12,000 for wages paid after March 31, 2021. This credit now applies against Medicare, not just Social Security, after March 31, 2021.
Employee Retention Credit
This credit is now extended through the end of 2021. This credit now applies against Medicare, not just Social Security, after June 30, 2021.
Continuing to Fight the Pandemic
In addition to the financial supports for individuals, the plan also allocates funds for coronavirus testing, contact tracing and genomic sequencing, as well as vaccine distribution. The Federal Emergency Management Agency will also receive funds, as will state and local governments, schools, colleges and universities, transit agencies, child care providers, housing aid and food assistance. Businesses, including restaurants and live venues, as well as multiemployer pensions that are in financial trouble are also going to receive funds.
We’re Here to Help
The Corrigan Krause Coronavirus Crisis Team (CKCCT) is made up of experts ready and equipped to answer your questions as it relates to the current COVID-19 crisis. Please reach out to ckcrisisteam@corrigankrause.com for more information.