In early March, President Joe Biden signed a sweeping COVID pandemic relief package into law.

The milestone political victory gives $1,400 to most Americans and directs billions of dollars to state and local governments, businesses, and schools. Let’s take a closer look.

Unemployment Benefits

Expanded unemployment benefits of $300/week from the federal government have been extended through September 6th. This is in addition to what beneficiaries are already getting through their state unemployment insurance benefits. What’s more, the first $10,200 of jobless benefits accrued in 2020 are non-taxable for households with incomes under $150,000.

The measure also provides a 100% subsidy of COBRA health insurance premiums to ensure that people who have been laid off can stay on their employer-sponsored health insurance at no cost until the end of September.

Another Round of Stimulus

•   Single taxpayers will receive direct payments of $1,400

•   Married couples filing jointly will receive $2,800

•   Parents will receive $1,400 per dependent

•   Single filers who earn up to $75,000 will get the full amount

•   Married couples with a household income up to $150,000 will get the full amount

•   The check will shrink for people who make above $75,000 but has a hard cut-off at $80,000 for individual filers and $160,000 for married couples.

Direct deposits are expected to begin this week, and the IRS has until December 31, 2021 to finish sending the stimulus payments.

Expanded Child Tax Credit

The new legislation expands the child tax credit that currently allows families to claim up to $2,000 for kids under 17. The bill extends the benefit to lower-income families who wouldn’t receive the credit otherwise. Families can now claim up to $3,600/year for kids under 6 and up to $3,000/year for kids between 6-17.

The bill also removes a provision that you have to make $2,500/ year to receive the credit and makes the credits fully refundable.

Additionally, the legislation will expand tax credits for the next year to provide additional help covering the cost of child care.

Families will be eligible to get back as much as half their spending on child care for children under age 13, as a tax credit.

Funds for State and Local Governments

The legislation will send $350 billion to state and local governments and tribal governments to cover costs incurred until the end of 2024.

A lot of communities have taken hits to their tax base during COVID-19, but the impact fluctuates from state to state and from town to town.

Aid to schools

The legislation calls for around $130 billion in additional help to schools for K-12 students. This money will be used to reduce class sizes and make social distancing modifications to classrooms, ventilation system installation, and to buy personal protective equipment (PPE). The money can also be used to hire more counselors, nurses, and janitors, or to provide summer school.

College and university spending will get a $40 billion boost and will be used to defray pandemic-related expenses and for emergency aid to students to cover costs like food, housing, and computer equipment.

Aid to Restaurants, Bars, Live Music Venues

It’s no secret that bars and restaurants have been crippled by the effects of the pandemic. A new program aims to provide $28.6 billion to struggling bars and restaurants. The grants provide up to $10 million per company with a cap of $5 million per physical location. The grants can be used to cover operational expenses like payroll, rent, and utilities.

The plan includes an additional $1.25 billion for the Shuttered Venue Operators Grant Program that will be used to offset the horrible year live music venues had in the face of COVID-19 restrictions.

The bill also provides $7.25 billion for the Paycheck Protection Program.

COVID Testing and Vaccines

The legislation provides around $50 billion to expand COVID-19 testing and to enhance contact tracing capabilities by expanding laboratory capacity and mobile testing units.

The bill also contains more than $15 billion to speed up the distribution and administration of COVID-19 vaccines across the country.

An additional $1 billion will be used to boost vaccine confidence, and $10 billion will be used to boost the supply of medical devices and other equipment to combat covid-19 under the Defense Production Act.

Rental and homeowner insurance

The legislation provides more than $30 billion to help low-income households pay their rent and to help the homeless population. States and tribes will receive an extra $10 billion for homeowners who are struggling with mortgage payments and other housing costs due to the pandemic.

One thing that stimulus packages, checks, and tax breaks complicate is taxes. This tax season will be a particularly interesting and complicated time to file taxes because of all of the stimulus checks and subsequent tax breaks presented throughout 2020. Don’t risk making a mistake that could cost you thousands of dollars or have you leaving thousands of dollars on the table.

 

Contact us today and have your tax questions answered and your return prepared by a professionally skilled at maximizing tax returns.