Assistance for those impacted by COVID-19 (Updated April 2021)
To recap other stimulus packages to date, Congress approved the initial $2.3 trillion stimulus package, referred as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), on March 27, 2020. Close to nine months later, Congress approved $908 billion on December 21, 2020 in a second round of stimulus payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to protect those set to lose federal unemployment aid at the end of last year.
On March 10, they approved a third round of economic relief totaling $6 trillion with stimulus assistance under the American Rescue Plan Act of 2021 accounting for $1.9 trillion to address continued economic impact from the pandemic and expiring unemployment assistance. President Biden signed it into law on March 11.
Although most Americans will receive assistance as part of this latest stimulus package, we are here to summarize how this latest stimulus package will impact you. Below are key parts of this third stimulus package and what amounts to anticipate in the form of future tax credits or a direct deposit/check from the Dept. of Treasury based on your income eligibility:
THIRD ROUND: ADDITIONAL ONE-TIME TAX CREDITS
Like the prior two stimulus assistance packages, any additional Economic Impact Payments (EIPs) from this third round are considered non-taxable tax credits.
Up to $1,400 for individuals, plus an additional $1,400 per child under the age of 17, for filers earning less than $75,000 annually. Individuals with an adjusted gross income (AGI) above $75,000 will gradually receive less or no stimulus aid if their AGI is above $80,000. Even with dependents, single filers who earn more than $80,000 will not receive a stimulus payment due to the cut-off.
Up to $1,400 for joint filers (for a total of $2,800), plus an additional $1,400 per child under the age of 17, for joint filers earning less than $150,000 annually. Joint filers with an adjusted gross income (AGI) above $150,000 will gradually receive less or no stimulus aid if their AGI is above $160,000. If you are filing as head-of-household, your threshold is $112,500 before any reduction in stimulus aid. Even with dependents, joint filers who earn more than $160,000 or individuals filing as head-of-household who earn more than $120,000 will not receive a stimulus payment due to the respective cut-offs.
HOW IT WORKS
You do not need to take any action to receive the stimulus payment.
If you have a bank account on record with the IRS for direct deposit of tax refunds or Social Security benefits: You will likely receive your payment electronically
If you do not have an account with the IRS: You will likely receive a paper check from the Department of Treasury
Please note that there is still a small chance that you receive a paper check even if your IRS account profile is set up to receive electronic payments.
NEW – Additional Child Tax Credits
For your 2020 tax return, child tax credits will remain at $2,000 per child under the age of 17 whom you claim as a dependent with a Social Security Number.
Next year, you can claim a temporarily higher child tax credit (either $3,000 or $3,600) on your 2021 tax return. The credit is fully refundable with half of the credit eligible to be received in periodic payments between July and December 2021 from the IRS. For some eligible families, the IRS may send out monthly payments for a total of six advance payments, up to half of the owed child tax credit.
Like stimulus payments, this tax credit also depends on AGI levels and is susceptible to gradually phasing out. The credit starts to phase out if the AGI is more than $400,000 on a joint return, or greater than $200,000 for an individual or head-of-household return. Up to $1,400 of the child credit is refundable for some lower-income individuals but without the customary minimum $2,500 earned income requirement.
The American Rescue Plan Act of 2021 authorizes:
An increase in the total available number of benefit weeks to individuals from 50 to 79 weeks
A continuation of $300 per week until September 6, 2021 to everyone qualified for unemployment insurance benefits
An extension of the additional $100 per week for some self-employed or gig workers
Unemployed workers to get an extra 29 weeks of benefits beyond the number a state currently provides, up from 24 weeks.
HOW IT WORKS
Apply directly with your state’s unemployment office.
Visit the USA Unemployment Help Page for Additional Information
The American Rescue Plan Act of 2021 refers to the third round of stimulus payments you will receive as a direct deposit or check.
STUDENT LOAN ASSISTANCE
On March 11, the U.S. Department of Education extended the emergency relief measures for ED-held student loans until September 30, 2021.
First, for federally backed loans, your lender or loan servicer may not foreclose on you until after June 30, 2021. For loans backed by Fannie Mae or Freddie Mac, they cannot foreclose until after June 30, 2021.
Second, if you experienced financial hardship due to the coronavirus pandemic and obtained forbearance on or after June 30, 2020, you may receive up to an additional six months in three-month increments.
HOW IT WORKS
To request payment deferrals for your mortgage, you will want to reach out to the lender that you are making your payments to.
HELP FOR RENTERS
Due to concerns over the spread of COVID-19, the Centers for Disease Control and Prevention (CDC) extended an order to stop certain evictions until the end of March 2021. Some states and localities have also temporarily stopped evictions.
You may have other protections if your rent is federally subsidized, or your landlord is getting forbearance help with a mortgage backed by FHA, VA, USDA, Fannie Mae, or Freddie Mac.
Individuals concerned that their pension income may be reduced over the next 20 years or sooner are now protected by the Butch Lewis Emergency Pension Plan Relief Act of 2021 (part of the American Rescue Plan Act).
There was no extension in “coronavirus related distribution” (CRD) protection for individuals impacted by COVID-19 and those who took advantage of the allowed limit up to $100,000 in retirement savings early without a 10% penalty. The last day to take advantage of a CRD was December 30, 2020.
HOW IT WORKS
Contact your retirement account or IRA specialist. You will also want to make sure you are working closely with your tax advisor.
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