If you have been following the news, you know the new COVID relief plan should be signed by President Biden today. It’s called The American Rescue Plan.
This plan not only includes another $1400 in stimulus payments for tax payers and their dependents, but it also includes other tax benefits for certain individuals applicable for this CURRENT TAX YEAR.
- If you have children age 17 and under, you may now get an additional tax benefit for them
- If you received Unemployment Insurance payments in 2020, up to $10,200 of that income may now be excluded from being taxed
There’s also another funky benefit for certain people who may be losing tax deductions due to earning more than 75,000/year.
So Now We Wait…. Why?
Once President Biden signs The American Rescue Plan, the IRS and tax software providers will need time to change their systems. Additionally, Tax Pros need time to learn the new laws and calculation factors.
We anticipate there will be a delay in the tax season, and perhaps even an extended tax deadline.
Having said this, I’d like to hold off on finalizing any tax returns that may be affected by the new tax laws. However, if you’d like to go ahead and file your taxes as is, I will certainly do that for you as long as the tax authorities allow it. Please know that if you decide to go ahead and file now, and then later need to file a tax amendment, my fee for amendments starts at $75.
I will keep providing updated information about the American Rescue Plan on my FaceBook page, which is also visible from my website. I will send email updates as well, although much less frequently than the updates posted on Facebook.
Here’s a preliminary list on what we’re expecting to see in the plan:
Individual tax provisions
A $10,200 per individual unemployment insurance exclusion for the 2020 taxable year, only for households with modified AGI of $150,000 or less;
A third round of Economic Impact Payments of $1,400 per individual and dependent (including dependents over age 17);
Increased and fully refundable Child Tax Credits and Dependent Care Assistance Credits for the 2021 taxable year;
An increased employer-provided dependent care assistance exclusion;
A five-year COD exclusion for student loan forgiveness;
Expansion and increase of the Earned Income Tax Credit;
Increase in the Premium Tax Credit for 2021 and 2022; and
Six months of free COBRA benefits.
Business tax provisions
Extension and expansion of the Employee Retention Credit;
Extension and expansion of the employer credits for paid sick and family leave benefits;
Credits for providing subsidized COBRA benefits; and
Restaurant revitalization grants to cover restaurant business losses.
I will be working hard for the next few weeks trying to figure out what all this means LOL. Lawd have mercy!