President Biden signed this $1.9 trillion COVID relief bill into law on March 11, 2021. It is an act that is geared towards alleviating poverty and will have a significant impact on many individuals and families. Here is a summary:
Individuals/Couples Direct Payments
This bill funds a third round of economic impact payments to qualifying Americans. It is different from the two previous payments, with some expansion of benefits to more people and a tighter income limitation.
Payments of $1,400 per person, including dependents
Phase-out ranges, based on adjusted gross income (AGI):
- Single filers $75,000 to $80,000.
- Head of household: $112,500 to $120,000.
- Married joint with income below $150,000 to $160,000.
These qualifications are based on the following:
- 2019 tax return or 2020 tax return if 2020 has already been filed.
- If the 2020 return has been filed and the 2020 income is too high but the 2021 income is below the thresholds, the rebate will be a tax credit on 2021 return.
- If the 2020 income is too high for the rebate, but 2019 income qualifies, then the 2020 tax return shouldn’t be filed until the recovery payment is received.
If you Have Children 17 and Under
- The child tax credit has been significantly increased to $3,600 for children under 6 and $3,000 for children 6-17. The eligibility is subject to the same phase-outs as listed above.
- In addition, the child and dependent care tax credit has also increased to allow for qualifying expenses for children to $8,000 per child or $16,000 for 2 children. This also is subject to income phase-outs but at a higher level of income.
If you were unemployed:
- Benefits have been extended to 9/6/21.
- $10,200 of unemployment benefits received in 2020 will be tax free if the AGI is less than $150,000.
- Health insurance benefits have been expanded via COBRA subsidies and enhancements to the Premium Assistance Tax Credit.