COVID-19 Relief: An Overview of the New American Rescue Plan Act

Mar 26, 2021 | Tax & Accounting

On Thursday of last week, President Joe Biden signed the $1.9 trillion coronavirus relief package, entitled the New American Rescue Plan Act, into law. It was created to help the financial hardships brought on by COVID-19. The bill is geared to help individuals as well as businesses.

Below are some of the main provisions in the bill.

Individual tax provisions

  • A $10,200 per individual unemployment insurance exclusion for the 2020 taxable year, only for households with modified adjusted gross income (AGI) of $150,000 or less. Those who have already filed returns reporting 100% of their unemployment will need to supersede or change their returns to get a refund.
  • The third round of Economic Impact Payments of $1,400 per individual and dependent (including dependents over age 17).
  • Extension of Pandemic Unemployment Assistance until September 6 with a $300 increase.
  • 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.
  • An expansion and increase of the Earned Income Tax Credit.
  • Tax relief for excess advanced Premium Tax Credits received in 2020, and an increase in the Premium Tax Credit for 2021 and 2022.
  • Six months of free COBRA benefits.

Business tax provisions

  • Extension and increase of the Employee Retention Credit.
  • Extension and increase of the employer credits for paid sick and family leave benefits.
  • Credits for providing subsidized COBRA benefits.
  • Restaurant recovery grants to cover restaurant business losses.

To access the full text of the bill, go to:
https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president-biden-announces-american-rescue-plan/

If you have any questions on this or any other topics, please call us at 818.954.9700 or send us an email at info@twhc.com.

Recent Posts

State Payments Excluded From 2022 Federal Returns

State Payments Excluded From 2022 Federal Returns

Taxpayers in 21 states received special payments related to general welfare and disaster relief in 2022. However, according to recently issued guidance from the IRS, they will not need to report these payments on their 2022 federal tax returns. The special tax refunds...

Five Overlooked Tax Breaks For Individuals

Five Overlooked Tax Breaks For Individuals

Are you confused about which credits and deductions you can claim on your 2022 tax return? You’re not alone. With tax law becoming more complicated every year, it’s hard to remember which tax breaks are available in any given year. With that in mind, here are five tax...

Tax Implications When Employed in the Family Business

Tax Implications When Employed in the Family Business

When a family member employs someone, the tax implications depend on the relationship and the type of business. Taxpayers and employers need to understand their tax situation. Here is what to know: Married People in Business Together Generally, a qualified joint...

What To Do If You’re Missing Important Tax Documents

What To Do If You’re Missing Important Tax Documents

As the April 18th tax deadline quickly approaches, last-minute tax filers should make sure they have all their documents before filing a tax return. You should have received a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your...

Call Now ButtonCall Now