As you have probably already heard, congress has passed the second-largest relief package in American history. This includes a third round of stimulus checks, an extension of unemployment benefits and tax-free forgiveness of student loans. Here are the details we have been given thus far:
- Individuals with AGI of $75,000 or less will receive $1,400; joint filers with AGI of $150,000 or less will receive $2,800; HOH filers with AGI of $112,500 or less will receive $1,400.
- Reduced payments will be cut off for individuals at $80,000, for joint filers at $160,000 and for HOH filers at $120,000.
- For qualifying families, every taxpayer and dependent, regardless of age will receive the stimulus check.
- Unemployed individuals can receive unemployment benefits of $300/week through September 2021.
- Taxes on the first $10,200 an individual received in unemployment income in 2020 are being waived, if their AGI is less than $150,000.
Note: The IRS is not expected to automatically make this update to already filed returns, so if this is applicable to you, we can file an amended return if we find that it will be beneficial for you after a net of prep fee analysis.
Student Loan Forgiveness
- The Student Loan Tax Relief Act will not cancel student loans, but it will make forgiven student loans (which are treated as income) non-taxable through 2026.
- The pause on student loan payments has been extended through October, as well as the accumulation of interest.
Child Tax Credit
- The CTC for 2021 will be increased to $3,600 for each child under 6 years old and to $3,000 for each child ages 6 to 17.
- This provision includes income cutoffs for higher-income families, similar to the stimulus checks’ income thresholds.
- Half of the CTC will be distributed in monthly payments from July through December of this year, with the remaining half being paid when people file their tax returns next year for 2021.