Mar 19, 2021 The American Rescue Plan Act Summary

The American Rescue Plan Act (ARPA) was passed and signed into law last week to provide additional relief to individuals and businesses. Below is a summary of a few of the key pieces of the act. If you have any questions on how these provisions may affect you, please feel free to reach out to your advisor.

  • Stimulus/Recovery Rebate Credit
    • Payments of $1,400 per individual plus $1,400 per dependent
    • Eligibility is based on adjusted gross income (AGI). It is broken into the following ranges. AGI’s that fall in the phase out range will receive a partial payment:
      • Single tax filers: $75,000 – $80,000
      • HOH filers: $122,500 – $120,000
      • Married Filing Jointly: $150,000 – $160,000
    • Will be based on 2020 tax return if already filed. Otherwise, IRS will use 2019 income tax return.
    • If a tax payers 2020 tax return is not filed, they will have until August 15th, 2021 to have income reviewed for a potentially higher recovery rebate credit.
  • Child Tax Credit (CTC)
    • Increased to $3,600 for 2021 for children under age 6
    • Increased to $3,000 for 2021 for children ages 6-17
    • These increased amounts are subject to the lower phaseout ranges below:
      • Single tax filers: $75,000
      • HOH filers: $112,500
      • Married Filing Jointly: $150,000
    • The Child Tax Credit will pay out partially in advance from July 2021 through December 2021, but may be clawed back.
    • If a tax payer isn’t eligible to claim the CTC in 2021 due to high income, they may be able to claim the regular $2,000 CTC depending on the existing phaseout rules.
  • Child and Dependent Care Credit
    • In 2021, the credit is fully refundable and expanded to $4,000 for one child and $8,000 for two or more children for households making up to $125,000.
  • Student Loans
    • No loan forgiveness has been passed, but the act states any loan debt forgiven between December 31, 2020 and January 1, 2026 will receive tax-free treatment.
  • Unemployment Benefits
    • An additional $300 per week in unemployment benefits will be paid through September 6, 2021 on top of state benefits.
    • In addition, the first $10,200 per person of unemployment benefits received beginning in 2020 isn’t included in gross income for taxpayers with AGIs under $150,000.
  • Employer-Related
    • Employee Retention Credit (ERC) is extended to the end of 2021.
    • Paycheck Protection Program (PPP) second draw deadline is March 31, 2021 and has expanded to include more businesses.

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Important Disclosures

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