The details of the American Rescue Plan 2021 are still being processed BUT we know
that it doesn’t include RMD relief for 2021 nor increased minimum wage. It does
provide both 2020 and 2021 tax filing items. Below, I’ve outlined those that I found
most significant so far.
- “Stimulus Checks” For individuals: $1,400 per eligible individual for
all dependents with stricter phaseout that start at $75K for individuals and at
$150K for those married filing jointly (MFJ). File early if your 2019 tax filing
does not qualify you for this stimulus. - Expansion of Child Tax Credit: It provides an increased amount of child
tax credit for those under $150K (MFJ) AND an increase to $400K (MFJ) in
earnings for the base credits. In 2021 there should be an opportunity to
receive more child tax credits for up to $400K. - Extension of Unemployment Compensation: An additional weekly
$300 Unemployment benefit was added, and coverage was extended until
September 6th, 2021. - 2020 Tax-free Unemployment Insurance income: For those receiving
Unemployment Insurance in 2020, up to $10,200 of those earnings will be
tax-free. - Increased Premium Credit Assistance: Healthcare premium assistance
extended from 2020 through 2021 with higher earnings. - Tax Credit for Employers to cover COBRA for 3 months: Any
employee involuntarily laid off will have free full COBRA coverage for 3
months by the employer who will receive credits for paying their COBRA. - Tax-free student loan forgiveness for the future – if a student loan is
forgiven by 2025, it will be tax-free.
It will take time to distill what will be relevant for 2021 taxes particularly since we are
all still trying to understand and work through CARES 2020 tax rules and implications
for 2020. For now, it makes sense to slow down the 2020 tax filing and
ensure that your CPA is aware of all of the CARES 2020 and TARP 2021
rules before filing – luckily, we all now have until May 17th.
Edi Alvarez, CFP®
BS, BEd, MS