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Congress approved another coronavirus relief bill on March 10, 2021, the American Rescue Plan Act of 2021. The passing of the $1.9 trillion bill comes on the heels of a long and close vote in the Senate last week. The new bill, expected to be signed into law by President Biden on March 12, includes provisions for stimulus payments, extended employment benefits, additional small business funding, and much more.
As we have done many times during the COVID-19 pandemic (many in our Coronavirus Resource Center), the teams at STA Wealth and Doeren Mayhew wanted to share these highlights directly impacting individuals and businesses:
Similar to the two previous stimulus payments, these payments are fully refundable credits against 2021 taxes and only for 2021. However, unique to this bill is the allowance of residents married to undocumented residents to receive the direct stimulus payment. The IRS will post more details as they become available at www.irs.gov/coronavirus.
As these payments are made in the coming weeks, they will be made based on the taxable income reported in your most recent filed tax return (for most, it will be their 2019 or 2020 1040 Tax Return). A point to note, if you qualify (per the phaseouts) with your 2019 return, don’t file your 2020 return until you get your check as there will be no “claw-back” in the event your income exceeds the thresholds in 2020 or 2021. The same thing goes if your 2019 return does not qualify you for these payments (or you expect your 2021 tax return not to qualify), but if your 2020 return qualifies, you should file your 2020 return right away. Talk to your CPA right away to get some timely guidance, and see the image on “checkpoints” for eligibility at the end of this article.
A provision in the bill also calls for the first $10,200 in unemployment insurance benefits to be tax-free for households with up to $150,000 in income (regardless of single or joint).
Until now, employers were only allowed to claim a total of 10 days of paid sick and family leave for each employee. After March 31, 2021, a new 10-day period will be available per employee.
Taking Advantage of Relief
Wondering how the American Rescue Plan Act of 2021 will impact you and your business? Both STA Wealth’s Financial Planners and Doeren Mayhew’s Houston tax advisors stand ready to help you take full advantage of the tax credits and deductions available to you, especially in these times of uncertainty. If you have questions about how the new legislation may impact you or your business or your financial plan, call us today.
Also, please check out these other tax and policy related articles on our website:
Checkpoints for Eligibility for 2021 Rebates:
My friend Jeffrey Levine, CPA/PFS, CFP®, on Kitces.com shared some thoughts as well in addition to this great image to help you determine if you will be eligible for the Act’s rebates:
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