Yet another Federal program aimed at financial relief for taxpayers, the American Rescue Plan Act (ARPA) was signed into law in March of 2021. Some of the benefits included in this plan have already been handed out, including the third round of stimulus payments. Other provisions are included that will affect 2021 income tax filing as well as retroactive provisions for 2020 taxes.
2021 Tax Implications
- Unemployment – Additional expanded payments of $300 per week to be extended until Sept 6, 2021. States had the option of continuing to use federal payments to add to their current state unemployment payments. Many states opted out earlier this summer out of concern that the program was keeping recipients from looking for a job.
- Child tax credits – As of July 15, families with minor children began receiving $300 tax credit checks, which should continue through until Dec 15, 2021. For more specific details regarding child tax credits, click here.
- Student Loans – The CARES Act
- EITC –2021 earned income tax credits are geared to providing financial relief to individual taxpayers with low-to-moderate income. For eligible individuals, the tax credit to be hoped for (EITC) is equal to the credit percentage for their earned income for 2021. If one doesn’t owe taxes, they may still get a “refund” which is just free money. This credit can range from $1,502 to $6,728, depending on the presence and the number of eligible children in a household.
2020 Retroactive Tax Implications
- Unemployment – The first $10,200 for single filers and $20,400 of unemployment payments for married joint filers is tax-free for the year 2020. The IRS will make this correction automatically if you filed before the ARPA was passed. If this was not adjusted, check with the IRS.
- Excess Premium Tax Credits – These tax premiums were waived by the IRS.
The retroactive changes came out during tax time, so some filers may have already incorporated those changes in their 2020 filing. For those who filed without these provisions in place, it may be beneficial for you to file an addendum. Chances are, you’ve left more refund money on the table if you don’t. Synergi Partners can make sure you get all the benefits, exclusions and credits you are due on your 2021 and 2020 taxes, even after the fact. Find out the best ways to take advantage of these programs by contacting us today.