The $1.9 trillion stimulus bill passed by the House is intended to provide relief and fix other concerns related to the COVID-19 pandemic. It is expected to be passed before March 14th, 2021, when a number of provisions of the Consolidated Appropriations Act which have been extended will expire. The revised bill was supposed to be voted on by the House on Tuesday, March 9, 2021. However, since there was a razor-thin margin of votes in the House to begin with, a day or two delay is expected.
The American Rescue Plan Act of 2021 was returned to the House of Representatives for final passage and analysts began delving into the $1.9 trillion stimulus bill’s various tax clauses, and lawmakers were so keen to get it to President Biden’s desk for his signature.
The bill provides a $1,400 stimulus payment, or Recovery Rebate, in addition to grants to schools and state and local governments. The Recovery Rebate grants, like the two previous stimulus payments, are entirely refundable credits against 2021 taxes, payable in advance.
The bill also proposes an emergency program of relief initiatives for those that have already been devastated by the pandemic. In addition to the stabilization payments, it calls for an expansion of the existing Child Tax Credit, Child and Dependent Care Credit, and Earned Income Tax Credit. It expands paid maternity time and parental leave credits, extends the Employee Longevity Credit until December 31, 2021, relaxes certain pension requirements, and repeals the worldwide interest allocation provision of the Affordable Care Act.
The CARES Act made extended unemployment benefits taxable, although the Senate added a new exclusion for them. The Senate bill makes an exception for the first $10,200 in unemployment insurance for households making up to $150,000. The reform in the handling of unemployment insurance is causing some confusion because a substantial number of taxpayers have already filed and paid tax on the sum. If the bill passes with that provision, taxpayers would be forced to file an amended return.
The Senate bill further expands the exclusions for forgiven student loans. Established statute only exempted forgivable student loans under such cases, such as death or impairment. The Senate amendment applies the waiver for any reason to loans discharged after 2020 but before 2026.
Many of the more social Democrats in the party are talking with increasing the minimum wage. If it stayed in, it was unknown whether it could pass with a mere majority or would take 60 votes to pass. If the minimum wage isn’t increased, some Democrats consider a workaround in which large firms are taxed.
Most of the provisions only apply to the fiscal year 2021. They’ll have to wait for the next round of legislation to make them permanent.
As another rescue plan for Americans is set to roll out, the extension and expansion of a number of tax provisions is always on the lookout for tax payers. Consult a tax expert and take advantage of the adjustments made to the new bill. Please call us at (516) 666-8880 or schedule a free consultation on this link directly https://calendly.com/levine-and-associates.