Frequently Asked Questions about the American Rescue Plan Act (ARPA):
INDIVIDUAL STIMULUS CHECKS (RECOVERY REBATES)
Will I get a Stimulus Check?
Stimulus checks of $1,400, plus $1,400 per dependent, will be sent to single tax filers with adjusted gross income (AGI) up to $75,000 per year, heads of households with AGI up to $112,500 and married couples with AGI up to $150,000. The checks phase out when AGI exceeds $80,000, $120,000 and $160,000, respectively. Adult dependents, such as college students and other qualifying family members count as dependents.
Will my 2019 or 2020 income determine my eligibility for a Stimulus Check?
The stimulus payments will be based on your 2019 or 2020 income, depending on whether you have filed your 2020 tax return. Those who expect their 2020 AGI to phase them out of a stimulus check may want to consider waiting to file their 2020 returns. Also, if you were supposed to receive a Stimulus Check based upon your 2020 income but did not receive it because the government based your eligibility on your 2019 tax return, you can claim a credit on your 2021 return.
Will I have I have to repay the Stimulus Check?
No. If you receive a payment based on your 2019 AGI even though you are disqualified by your 2020 AGI, you will not have to pay it back.
UNEMPLOYMENT BENEFITS UNDER THE ARPA
What is the maximum unemployment benefits period?
The maximum period of benefits is increased from 50 weeks to 79 weeks.
How long will the extra $300 unemployment benefits be paid?
The extra $300 per week in unemployment benefits over and above state unemployment benefits is extended through September 6, 2021.
Is my unemployment taxable?
For tax year 2020 the first $10,200 in unemployment benefits is nontaxable for households with incomes less than $150,000. For those who have already filed their 2020 income tax returns, amended returns may not be required. The IRS is working towards a solution to make the adjustments automatically.
CHILD TAX CREDITS UNDER THE ARPA
Does the ARPA increase the amount of the child tax credit for 2021?
Yes. The ARPA increases the amount of the child tax credit to $3,000 per child ($3,600 for children under 6) for 2021. The increased credit amount phases out for taxpayers with incomes over $150,000 for married taxpayers filing jointly, $112,500 for heads of household, and $75,000 for others, reducing the expanded portion of the credit by $50 for each $1,000 of income over those limits.
Will I receive monthly checks for the child tax credit?
The ARPA provides for monthly advance payments for the increased child tax credit beginning in July 2021, based on a taxpayer’s most recently filed tax returns. Eligible taxpayers will receive half of the credit before the end of 2021.
Will I have to repay the advanced payments of the child tax credit?
Possibly. If the advance payments exceed the amount of the credit you are entitled to on your 2021 tax return, you must pay back the excess amount. Allegedly, eligible taxpayers will be able to notify the IRS that they wish to opt out or modify the amount of the advance payments.
CHILD AND DEPENDENT CARE TAX CREDIT UNDER THE ARPA
Does the ARPA increase the amount of the child and dependent care tax credit for 2021?
Yes. The child and dependent care credit will be worth 50% of eligible expenses, up to a limit based on income, making the credit worth up to $4,000 for one qualifying individual and up to $8,000 for two or more. The credit will begin to decrease for income levels over $125,000 but cannot be lowered to less than 20%.
STUDENT LOAN FORGIVENESS UNDER THE ARPA
Did the ARPA create student loan forgiveness?
No. However, it did create a provision that student loan debt forgiveness is tax-free if done between December 31, 2020, and January 1, 2026, thus creating a strong inference that student loan forgiveness may be coming in the near future.