The 3rd Stimulus Bill of $1.9T (that’s a lot of zeros! >> $1,900,000,000,000) has passed Congress and will likely become law tomorrow. This means a bunch of politicians crammed a ton of political paybacks (as usual) into a massive bill and then iced it with a little stimulus relief for the people who actually have to pay for it. Now, the IRS and other bureaucrats have to figure out how to actually implement the changes and issue guidance, so stay tuned for that update. For now, here are some of the key provisions that may affect you.
Stimulus – $1400 of stimulus per person (up to $5600 per family) will be going out “soon”, based on your 2020 or 2019 tax return. The phase out limitations start at the same place ($75k single, $112.5k Head of Household, $150k Married Filing Joint), but happen MUCH MUCH quicker ($80k, $120k, $160k), so if your income is over the limits, sorry. The gov’t thinks you’re rich now! The IRS says the best way to make certain you get your Stimulus 3 check as quickly as possible is to get your 2020 taxes filed now!
Unemployment – the first $10,200 of unemployment received in 2020 is exempt from Federal taxes. Some states are also exempting the income, but Georgia is not … yet. We are waiting on guidance, but we expect this means that anyone who has already filed their taxes with unemployment will need to file an amended return. EGADS! It should be well worth doing an amend (we charge $50) for most people affected though.
Unemployment – Bonus unemployment of $300 per week has been extended through the Summer for any of you still struggling to find a job.
Child Tax Credit – The CTC has been massively increased in 2021, and Congress wants the IRS to start issuing monthly payments in July instead of waiting until tax season and getting a bigger “refund”. We shall see how this one plays out, but the bottom line is that people with kids will be happy either in July or next tax season!
Earned Income Tax Credit – EITC has also been increased (almost tripled!) in 2021 for low-income tax payers without children. EITC age restrictions are also largely gone, so more taxpayers will be eligible for the credit in the future.
Child Care Credit – The Child Care Credit has been increased to 50% (up to $4000 for 1 child or $8000 for 2+) and made fully refundable for 2021.
The ARP Act (yeah, that’s the official name) includes a slew of other provisions that may help individuals, including rent and mortgage relief, healthcare credits and assistance and higher education support, as well as benefits for small businesses including extensions of the Paycheck Protection Program (PPP) loans and employer tax credits.
Taxes are still due April 15th (for now), but we expect that may change (sigh!) since the distribution of Stimulus 3 checks will take precedence. That said, you shouldn’t procrastinate since it may delay your stimulus payment.
I’ll send another update once we have guidance from the IRS on Stimulus 3 and Unemployment. Until then, please stand by! As always, feel free to call our office or email me with any questions.