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):
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- 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:
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- 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.
Read More: Questions and Answers about the Third Economic Impact Payment
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.