Wink Inc.
Enrolled Agents
America’s Tax Experts
®
Wink Tax Services
Wink Inc. Enrolled Agents | 2701 Troy Center Dr, Ste 430 |
Troy | Michigan | 48084 | Tel: 248-816-1220 | TF: 800-276-8319
| Text: 248-800-6013 |
American Rescue Plan Act - H.R. 1319 Summary of Title IX
Unemployment
As an extension of the CARES Act, weekly unemployment benefits have
been extended through Sept. 6, 2021, with a weekly benefit amount at
$300. The first $10,200 ($20,400 if MFJ) of unemployment benefits for
2020 will be nontaxable for taxpayers with adjusted gross income of less
than $150,000. If adjusted gross income is $150,000 or greater, the full
$10,200 or $20,400 of unemployment compensation becomes taxable.
COBRA
Reduces
premiums
payable
by
providing
premium
assistance
from
April
1,
2021,
through
Sept.
30,
2021.
Federal
subsidy
coverage
for
COBRA
premiums
increases
to
100%.
If
required
to
notify
a
group
health
plan,
failure to do so may result in $250 penalty for each failure.
2021 recovery rebates for individuals
A
2021
advance
recovery
rebate
or
a
third
economic
impact
payment
(EIP3)
of
$1,400
($2,800
MFJ)
will
be
issued
to
each
eligible
individual
plus
$1,400 to each dependent (including adult dependents).
The
payment
will
fully
phase
out
when
income
reaches
$80,000
for
single
filers,
$120,000
for
heads
of
household
with
one
child,
and
$160,000 for joint filers or surviving spouse.
An eligible individual is anyone except:
ྕ
Any nonresident alien individual
ྕ
Any individual who is a dependent of another taxpayer at the
beginning of the calendar year
ྕ
An estate or trust
The recovery rebate credit is based on the 2019 or 2020 tax return and will
be reconciled on the 2021 tax return.
For payments based on the 2019 return, the bill contains a provision that
allows for an additional payment if the advance of the recovery rebate is
greater based on the taxpayer’s 2020 return.
Child Tax Credit [CTC]
Special rules for 2021 include an expansion of the credit from $2,000 to
$3,000 per eligible child under age 18 ($3,600 per child under age 6). The
fully refundable credit, with 50% of the credit issued as advance periodic
payments starting in July, will be reconciled on the 2021 tax return. For
2021, the increased credit amount (additional $1,000 or $1,600 per-child in
excess of the present-law $2,000 per-child) begins to be phased-out at
$75,000 ($150,000 for MFJ and SS and $112,500 for head of household).
Once the increased credit amount is reduced, the credit plateaus at $2,000,
and the phaseout begins at $200,000 ($400,000 for MFJ).
Earned Income Credit [EIC]
For 2021, the minimum age to claim the EIC for taxpayers without children
(childless EIC) generally is reduced from age 25 to age 19 (except full-time
students). The maximum age limit of 65 for claiming the childless EIC has
been eliminated. The credit and phaseout percentage increases from
7.65% to 15.3% for an individual with no qualifying children. Taxpayers
may use their earned income from the 2019 tax year to determine their
EIC for the 2021 tax year if the 2021 earned income was less than the 2019
earned income.
The disqualified investment income limit also increases from $3,650 (2020)
to $10,000.
Dependent care assistance
For 2021, the credit is fully refundable and the dollar limit for eligible
expenses increases from $3,000 to $8,000 for one eligible child, and from
$6,000 to $16,000 for two or more eligible children. The maximum credit
rate increased from 35% to 50% and the AGI limitation increases from
$15,000 to $125,000. Taxpayers with an AGI of $125,000 to $400,000 will
receive a partial credit.
The exclusion for employer-provided dependent care assistance increases
from $5,000 to $10,500 ($5,250 for MFS).
Paid sick and family leave credits [FFCRA extension]
Extends the paid leave credits from April 1, 2021, through Sept. 30,
2021, for eligible employers providing sick or family leave that
otherwise would be required if the Families First Coronavirus Response
Act applied after March 31, 2021. Several new provisions also take
effect after March 31, 2021. For example: allows paid leave credits to
obtain COVID-19 vaccine, restarts the 10-day limit for qualified sick
leave wages and increases the qualified family leave wages limit from
$10,000 to $12,000 in total.
Employee Retention Credit 2021
Extends the employee retention credit (ERC) through Dec. 31, 2021, for
wages paid after June 30, 2021, and before Jan. 1, 2022. After June 30, 2021,
the ERC offsets the employer’s share of Medicare tax.
Premium Tax Credit
Reduces health care premiums for low- and middle-income families by
increasing the Affordable Care Act’s (ACA) premium tax credit (PTC) for 2021
and 2022. The affordability percentages to be used for the 2021 and 2022
tax years:
For 2020, no repayment is required for taxpayers receiving excess advance
PTCs.
The bill also provides that if a taxpayer receives unemployment
compensation (UC), they can use the rates as if their household income
tier is 133% of the federal poverty line.
Modification of treatment of student loan forgiveness
Provides special rule for discharges in 2021 through 2025 that the
discharge of student loans as cancellation of debt is not included in
gross income. Student loan borrowers who made qualified student loan
payments after March 13 could have those payments refunded if they
notify their loan servicer. Tax refund and/or wage garnishment has been
suspended through Sept. 30, 2021, for those who have defaulted on
federal student loan debt.
Tax treatment of targeted Economic Injury Disaster Loan (EIDL)
advances
Excludes amounts received under §331 of the Economic Aid to Hard-Hit
Small Business, Non-profits, and Venues Act from gross income and
treats them as tax exempt income for partnerships and S
corporations. Allows deductions for expenses paid with targeted EIDL
advances, does not reduce tax attributes and allows basis increases.
Tax treatment of restaurant revitalization grants
Excludes amounts received from the Small Business Administration (SBA)
under §5003 from gross income and treats them as tax exempt income for
partnerships and S corporations. Allows deductions for expenses paid
with such amounts, does not reduce tax attributes and allows basis
increases.
Modification of exceptions for reporting of third party network
transactions
(1099-K Reporting)
After 2021, the de minimis exception for reporting a transaction changes from
$20,000 to $600. Clarifies that reportable transactions only include those for
goods and services, which will apply to transactions after the enactment of
this bill.
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consultation.
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Premium Tax Credit
In the case of
household income
(expressed as a
percent of poverty
line) within the
following income
tier:
The initial
premium
percenta
ge is —
The final
premium
percenta
ge is —
Up to 150%
0%
0%
150% up to 200%
0%
2%
200% up to 250%
2%
4%
250% up to 300%
4%
6%
300% up to 400%
6%
8.5%
400% and higher
8.5%
8.5%