On March 10th, the Biden administration passed a $1.9 trillion stimulus plan, known as the American Rescue Plan Act. Below, we’ve broken down how the bill may offer support to members of our Summer Search community.
Disclaimer: this article provides information and education regarding the American Rescue Plan collected by Summer Search staff. It is for informational purposes only, and does not constitute legal, tax, investment, financial, or other advice.
Individuals earning less than $75,000 will receive $1,400 and married couples earning less than $150,000 will receive $2,800. Learn more from the IRS here.
To see when your 2021 payment was sent, use the IRS Check My Payment Tool. Additionally, you can claim the recovery rebate credit if you did not receive the first or second stimulus checks sent in 2020.
Who is Eligible for the Stimulus Check?
- Taxpayers and their dependents of all ages, not just those under 17, will receive $1,400 stimulus checks. That means college students and adult dependents will be eligible for stimulus checks, unlike the stimulus checks of 2020. Read more here.
- "Mixed-status families" — or those with one undocumented parent — are also eligible for stimulus checks. However, undocumented parents will not receive payments.
The package extends the existing $300 weekly unemployment benefit through Sep. 6, 2021.
Related to those who received unemployment in 2020, if your modified adjusted gross income (AGI) is less than $150,000, you are excluded from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200.
If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable.
If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.
Child Tax Credit
Under the legislation, most Americans would receive $3,000 a year for each child ages six to 17, and $3,600 for each child under six.
The provision in the bill would last one year and be sent via direct deposit on a "periodic" basis. It is a major expansion of the existing child tax credit, which provides $2,000 a year for children from birth through age 16.
Included in this plan is a tax-free subsidy that will pay 100% of the COBRA continuation premium for individuals who are eligible for COBRA as a result of an involuntary termination of employment or a reduction in hours. The premium assistance will last from April 1, 2021 through Sep. 30, 2021. Premiums for COBRA qualified beneficiaries who are eligible for the premium assistance will be paid by the federal government to employers through credits against employers' Medicare taxes.
Affordable Care Act (ACA)-created marketplace tax credits will increase and more people will be eligible to use them this year and next. ACA tax credits vary depending upon your age, location, and income level, and until now, you were only eligible if you are within about 400% of federal poverty (about $51,000 for an individual). The new stimulus package eliminates that cap, so more people are eligible for reduced health insurance premiums. Older adults could see the most significant benefit, since insurance prices can rise sharply if you are in that group and weren’t previously eligible for a credit.
You will not have to pay back tax credits from 2020 if your income was higher than you estimated during enrollment. That might affect you if you had an unpredictable income during the pandemic. And currently, the ACA marketplace, as well as some state-based marketplaces, are open for a COVID-19 enrollment period through mid-May — so you can enroll if you lost coverage during the pandemic, or change your selection if you have already made one.
Rent and Mortgage Relief
The bill sets aside more than $20 billion in emergency rental assistance and other relief for the homeless. Another $10 billion goes to mortgage and homeownership assistance.
Use the interactive map and searchable database, made by the National Low Income Housing Coalition, to find state and local emergency rental assistance programs near you.
Visit the COVID-19 Housing Resource Center form the National Housing Conference to find support for Renters and Homeowners.
Student Loan Relief
The tax break on college debt cancellations in the COVID-19 relief package has removed a potential roadblock to forgiving student loan debt. The provision won’t count any debt forgiven from Dec. 31, 2020, to Jan. 1, 2026, as income.
Formerly, any student loan debt canceled by the government was considered taxable and levied at the borrower’s normal income tax rate. This creates a new path for President Joe Biden to wipe away hundreds of millions of dollars in student loan debt as congressional Democrats continue to apply pressure on the issue. While there is no relief with student loans immediately from this bill, this hopefully lays the foundation for progress.
COVID-19 Funeral Relief Assistance
FEMA was granted $2 billion to reimburse individuals and households, up to $7,000, for COVID-19-related funeral expenses incurred between Jan. 20 and Dec. 31, 2020. Check the FEMA website for updates as they prepare this relief.
Cover image via IRS on Instagram.