August 24, 2022 Update: President Biden, Vice President Harris, and the U.S. Department of Education announced a three part student loan debt relief plan that includes an extension of the pause on student loan payments until December 31, 2022, debt cancellation, and a proposal to create an income-driven repayment plan to help lower future monthly payments. Find out more details about what this can mean for you here and below.
April 6, 2022 Update: The Biden Administration extends student loan repayment, interest, and collections through August 31, 2022.
December 22, 2021: The Biden Administration extended the pause of federal student loan payments, interest, and collections through May 1, 2022.
March 12: The IRS has begun distributing stimulus payments and we expect eligible people could receive their stimulus payments as early as next week (March 17th). We anticipate that the IRS Get My Payment tool will be updated next week.
For information on when you can expect your stimulus payment, visit the “Where’s My Third Stimulus Check?” blog post.
March 11: The American Rescue Plan was signed into law on March 11, 2021. The plan includes a third round of stimulus payments for millions of people. In addition, the bill also extends certain unemployment benefits and expands tax relief for unemployment benefits, the Child Tax Credit and the federal Earned Income Tax Credit (EITC).
Here is what you need to know:
Third Stimulus Payments for Individuals and Joint Taxpayers
Those eligible will get up to $1,400 in stimulus payments for each taxpayer in their family plus an additional $1,400 per dependent. This means a family with two children could receive $5,600.
Unlike the previous two rounds, you will receive stimulus payments for all your dependents, including adult dependents and college students.
Although you may want to file your 2020 return now in order to provide your most recent information to the IRS, including bank account information, you don’t need to do anything to get your stimulus check. The IRS will determine eligibility based on your last tax return, either 2019 or 2020, and will likely send your payment to the bank account where your tax refund was deposited.
For your 2021 tax return, the IRS will send a Letter 6475 with your total amount of 2021 stimulus payment. This letter only applies to the third stimulus payment received in 2021. This letter has all the info you need to report the correct amount of the third stimulus you received and understand if you are eligible for additional stimulus dollars and how much. If you didn’t get the full stimulus amount you were eligible for then you may be able to claim those dollars through the Recovery Rebate Credit on your tax return.
So, how do you know if you may be eligible to receive a third stimulus payment?
If you have an adjusted gross income (AGI) of up to $75,000 ($150,000 married filing jointly), you should be eligible for the full $1400 stimulus payment.
*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 8b of your 2019 Form 1040 or on line 11 of your 2020 Form 1040.
As your AGI increases over $75,000 ($150,000 married filing jointly), the stimulus amount will go down. The stimulus check rebate will completely phase out at $80,000 for single filers with no qualifying dependents and $160,000 for those married filing jointly with no dependents.
Once again, mixed-status households (households with different immigration and citizenship statuses) will be eligible for stimulus payments.
Expanded Unemployment and Retroactive Tax Relief
Unemployment payments will increase by $300 per week and the benefits will be extended through September 6, 2021.
The bill extends the Pandemic Unemployment Assistance (PUA), which expands unemployment to those who are not usually eligible for regular unemployment insurance benefits. This means that self-employed, freelancers and side giggers will continue to be eligible for unemployment benefits.
The bill also makes the first $10,200 of unemployment income tax-free for households with income less than $150,000. This provision would be retroactive to tax year 2020 (the taxes you file in 2021).
Expansion of Credits for Children of Workers
The American Rescue Plan also includes an expansion of tax credits for lower-income workers with kids.
Enhanced Earned Income Tax Credit
Beginning next year, the Federal Earned Income Tax Credit has been expanded for workers without kids and nearly triples the maximum credit. Eligibility is also extended for a wider range of filers, now allowing taxpayers to qualify who are over 65 or between the ages of 19-25.
Expanded Child Tax Credit
Beginning in tax year 2021(the taxes you file in 2022) the Child Tax Credit will be expanded. The bill increases the amount that families claiming the Child Tax Credit receive from $2,000 to:
- $3,600 for each child under 6
- $3,000 for each child age 6-17
The credit is now fully refundable – that means that you are eligible for the credit even if you don’t owe taxes.
Although this credit is for next year’s tax filings, payments will also be sent in advance, over the course of the year, beginning no earlier than July 2021 so people don’t have to wait to file their 2021 taxes. The IRS will likely determine eligibility based on your most recent tax filing.
For your 2021 tax return, the IRS will send a Letter 6419, 2021 advance Child Tax Credit (CTC). This letter will have the total amount of advance Child Tax Credit payments you received from July 2021 to December 2021 and you will need that number when you file your taxes. The IRS will use this number to make sure you got the right amount of your advance Child Tax Credit payments.
Tax Relief for College Students
The American Rescue Plan provides relief to students with government and federal student loans by allowing students with forgiven loan debt to exclude the discharged debt from their taxable income for tax years 2021 through 2025.
This provision does not apply to loans made by private lenders.
The Biden Administration has also extended the suspension of federal student loan payments, interest, and collections through December 31, 2022.
The pause includes the following relief for eligible student loans:
- Suspension of loan payments
- 0% interest rate
- Stopped collections on defaulted loans
Note: You do not have to pay a fee to get 0% interest or suspended payments for federal student loans.
Tax Relief for Self-Employed
The American Rescue Plan extends refundable tax credits for sick leave and family leave through tax year 2021 for both eligible self-employed and small business owners. The provision also allows you to use prior year net earnings from self-employment in the calculation of the average daily self-employment income if the prior year’s net earnings help you arrive at a higher average daily self-employment income. If you or a family member were impacted by coronavirus and you could not conduct your business, find out if you are eligible for the qualified sick and family leave credits using the Intuit Tax Credit Estimator.
Temporary Waiver to Pay Back Advance Premium Tax Credits
Due to the challenges Americans faced with fluctuating income in 2020, the American Rescue Plan temporarily waives the requirement for taxpayers to pay back excess advanced premium tax credits on their 2020 taxes since taxpayers may have received more income than projected when applying for a subsidy to help pay for Marketplace insurance.
The American Rescue Plan will also provide Cobra subsidies from April 2021 through September 30, 2021, for those who are laid off or experience reduced hours in 2021.
March 10: The American Rescue Plan passed the House today. The legislation still includes a $1,400 stimulus check for eligible Americans, expanded unemployment, and tax relief on unemployment benefits for households making under $150,000. The legislation will now go back to the President to be signed into law and we anticipate this will happen on Friday.
March 6: The American Rescue Plan passed the Senate today. As it stands today, the legislation agreement includes a $1,400 stimulus check for eligible Americans, expanded unemployment, and tax relief on unemployment benefits for households making under $150,000. The amended legislation will now go back to the House for passage before being sent to the President to be signed into law.
February 27: The COVID Relief legislation, known as the American Rescue Plan, passed the House of Representatives and has been sent to the Senate for discussion and voting. As it stands today, the legislation includes a $1400 stimulus check for eligible Americans and further tax relief through an expanded Child Tax Credit and Earned Income Tax Credit.
February 16: In January, President Biden proposed a $1.9 Trillion emergency coronavirus relief plan, called the American Rescue Plan. As it stands today, the plan includes a third direct stimulus payment, expanded unemployment, and the expansion of tax credits for families with kids.
President Biden has said that the American Rescue Plan is a priority for him and things are evolving quickly. We know how important these funds are to you, but no new law has been passed, yet, authorizing these payments.
The bill is currently working through Congress where changes could be made prior to a vote. If the House of Representatives passes the plan, it will then go to the Senate for discussion and voting and then to the President for signature.