American Rescue Plan Act (ARPA)
The $1.9 trillion American Rescue Plan Act was passed on March 11, 2021 to provide additional relief and address the impact of COVID-19 on public health, state and local governments, individuals, the economy and businesses. To read the full bill click here.
While there are several ways the bill is providing additional funding and relief, specifically there are provisions that impact taxes.
Direct Payments: Individuals will receive a $1,400 recovery rebate credit in the form of a direct payment ($2,800 for married taxpayers filing jointly), plus $1,400 for each dependent for 2021. This includes college students and qualifying relatives who are claimed as dependents.
- The recovery rebate credit begins to phase out for taxpayers with adjusted gross income (AGI) over $75,000 ($150,000 for married filing jointly). phasing out completely for single taxpayers with an AGI over $80,000 ($160,000 for married filing jointly).
- For heads of households, the phaseout begins at an AGI of $112,500 and phases out completely at AGI of $120,000.
*Our recommendation is to save any notice you may receive from the IRS regarding your direct payments since these payments will be reconciled on your 2021 federal tax return.
- Did you misplace, discard or never receive a notification about your stimulus payment(s)?
- These notices are critical to reconciling your taxes, click here to get a copy for your records. Once you open that page, you will need to click the 'Get My Payment' button and create an account.
Employee Retention Tax Credit (ERTC): Originally enacted under the CARES Act, eligible employers are able to claim a credit for paying qualified wages to employees through the end of 2021. This was an extension to the previous end-date.
- Additionally, tax credits for paid sick and family leave have been extended through September 30, 2021.
- The act also increases the amount of wages for which an employer may claim the credit to $12,000 and extends the time for which self-employed taxpayers can claim the credit to 60 days.
Unemployment Benefits: Under the new bill, for individuals who claimed unemployment benefits during 2020, up to $10,200 is tax-free for taxpayers making less than $150,000 per year.
- Additionally, a $300-per-week supplement to federal unemployment benefits has been extended through September 6, 2021.
Expanded Child Tax Credit: The bill expands this credit in several ways. First, it makes the credit fully refundable for 2021 and makes 17-year-olds eligible as qualifying children.
- The maximum for each child ages 6 to 17 is now $3,000, and $3,600 for each child under age 6 for couples who make $150,000 or less and single parents who make $112,500 or less.
- Payments will be sent by direct deposit on a monthly basis, from July 2021 through December 2021, to help families pay for ongoing costs.
- These payments will be reconciled with the actual credit amount on the 2021 tax return.
- *Our recommendation is to save any notice you may receive from the IRS regarding your Child Tax Credit advance payments since these payments will be reconciled on your 2021 federal tax return.
For more information visit our COVID-19 Guidance Center.
Tips of where to get your information about the virus
Indiana State Department of Health News ISDH.in.gov
World Health Organization WHO.int
Where to find local updates about the virus
Decatur County Health Department Facebook Page
Bartholomew County Health Department Facebook Page
Ripley County Health Department Facebook Page
Franklin County Health Department Facebook Page
North Vernon Plain Dealer & Sun Homepage
We are committed to serving clients with care, and we are confident we are taking precautionary measures to promote the health and safety of our staff and clients. We know that this is a stressful time for everyone, and we hope that you, your family and our community stay safe.
Please call us at 800-676-7567 if you have any questions