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On March 11, 2021, President Biden signed the American Rescue Plan into effect. It is the third and largest COVID-19 relief package since the pandemic started early last year. Guidance is still rolling out from the Internal Revenue Service (IRS) and other agencies; however, we wanted to share what we know so far with those that need immediate relief. There is much good news for many Bronx residents and families!
This relief package will provide a $1,400 per person stimulus direct deposit, check, or debit card (depending on how you received your last tax return) to households with adjusted gross incomes of $75,000, $112,500, and $150,000 or below for single filers, heads of households, and married couples filing jointly, respectively.
This third stimulus payment will include adult dependents, such as college students or older relatives, unlike the first two. To be eligible for this payment, you must have a social security number.
Your 2020 income will determine your eligibility for these payments if you have already submitted your 2020 taxes. If you have not done your taxes yet, the eligibility will be based on your 2019 income. Even though Free Tax Prep sites are limited this year due to Covid-19, UNHP recommends seeking out free tax prep by using our guide or calling 311 to locate in-person, drop-off, virtual, and self-assisted sites. Check out UNHP’s Free Tax Prep Guide to find options for self-assisted, drop-off, in-person, and drop-off tax preparation.
You can check on the status of your stimulus payment through this website or by calling 800-919-9835. If you did not receive the first two payments but qualify, you can claim them on your 2020 taxes through a recovery rebate credit. If your income is newly eligible for a stimulus payment, you can either file your 2020 taxes soon or reclaim the payment in your 2021 taxes.
IMPORTANT: Unlike the first two stimulus payments, this one is not protected from garnishment. Banking groups are advocating for Congress to change this, but as of yet, unfortunately there is nothing preventing private debt collectors from garnishing part or all of this $1,400 payment.
Unemployment benefits will have a $300 per week supplement on top of your regular benefits until September 6, 2021. Unfortunately, there may be a gap in payments as agencies program these new benefits.
IMPORTANT: This relief package made the first $10,200 of 2020 Federal unemployment benefits tax-free for people with incomes of less than $150,000. Up until now, unemployment benefits were considered taxable income by the federal government, so if you received unemployment your taxes will be lowered by this change.
If you already filed your 2020 Form 1040 or 1040-SR, there is no need to file an amended return (Form 1040-X) to figure the amount of unemployment compensation to exclude. The IRS will refigure your taxes using the excluded unemployment compensation amount and adjust your account accordingly. The IRS will send any refund directly to you.
If you haven’t filed yet, you should report your unemployment and fill out the Unemployment Compensation Exclusion Worksheet by the revised May 17 deadline. It is unclear if New York State will also exempt unemployment benefits.
Child Tax Credit
Usually $2,000 per child, the Child Tax Credit will now be $3,000 per child 6-17 and $3,600 per child 5 and under. This bill also includes 17-year-olds, which is new. The child tax credit is available to married couples who have an income up to $150,000, heads of the household up to $112,500, and single filers up to $75,000.
You can receive up to half of this credit as an advance on your 2021 taxes in monthly payments starting as early as July and collect the rest as a part of your claim in your 2021 tax return.
Child Care Tax Credit
The credit is worth up to $4,000 for one child under 13 or $8,000 for two or more children. The credit will be calculated by taking up to 50 percent of the value of eligible expenses, up to certain limits, depending on your income. (The more you earn, the lower the percentage you can claim.)
This is an increase from the previous $2,100 credit for two or more dependants. It is also available to households making up to $125,000 which is a large increase from the previous $15,000 income limit.
In 2021, you can also set aside $10,500 in a dependent care account instead of the normal $5,000 in a dependent care flexible spending account.
Earned Income Tax Credit
For 2021, more people will be able to claim the Earned Income Tax Credit. People without children will be able to claim the credit beginning at age 19 instead of 25, with the exception of certain full-time students. The upper age limit or 65 will be eliminated.
The maximum credit amount for childless people increases to $1,502, from $543.
People who otherwise would be eligible but whose children do not have Social Security numbers will be permitted to claim the version of the credit available to childless households. This change is permanent.
Almost $22 billion was set aside for states to assist households that are unable to pay rent due to the COVID-19 crisis. There is no set program yet, but here’s what we know so far:
- Funds will be given to tenants who have lost income due to the pandemic and earn less than 80% of the area median income, New York City that is less than $90,000 for a family of four approximately.
- Relief will not be restricted based on immigration status
- The relief can cover up to 12 months back rent and 3 months of future rent. Applicants seeking future rent payments will have to demonstrate that more than 30% of their income is going towards rent.
COBRA, insurance available after losing health insurance due to unemployment will become cheaper temporarily for people who have lost their jobs or had their hours cut.
The American Rescue Plan also reduces the cost of healthcare and increases the number of eligible people.
Finally, there is a Special Enrollment Period through the Federal Marketplace from February 15 to May 15 for people who needed health care coverage during the pandemic.
Emergency Broadband Benefit Program
Emergency Broadband Benefit is an FCC program to help households struggling to pay for internet service during the pandemic. The benefit will provide up to a $50/month discount for broadband service and associated equipment rentals. Eligible households can also receive a one-time discount of up to $100 for a laptop, desktop computer, or tablet supplied through a participating provider ($10-$50 consumer co-pay required).
There are many ways to qualify. Households are eligible if they meet one of these requirements:
- Income is at or below 135% of the federal poverty limit
- Participates in the FCC’s Lifeline program
- Receives Medicaid, Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), or Veterans and Survivors Pension Benefit
- Qualifies for free and reduced-price school lunch in 2019-2020 or 2020-2021 school year
- Received a federal Pell Grant this year
- Experienced substantial documented loss of income through loss of job or furlough since February 29, 2020 and the household had a total income in 2020 at or below $99,000 for single filers and $198,000 for joint filers
- Qualifies for a participating provider’s existing low-income or COVID-19 relief program
- Student debt forgiven or canceled from 2021 to 2025 will not be taxed.
- Employers who offer paid sick leave due to the virus will be given a tax break.
- Supplemental Nutrition Assistance Program (SNAP), formerly called Food Stamps, benefits will increase by 15% through September.
- An extra $1 billion will go to Temporary Assistance for Needy Families (TANF).
- The act also gives funds to the national vaccine campaign, public transportation, re-opening K-12 schools, Paycheck Protection Program (PPP), Employee Retention Credit (ERC), Restaurant Revitalization Fund, and pensions.
As indicated in this chart below there are many other benefits that will be emerging from The American Rescue Plan including expanded internet, discounted internet costs for low-income households, health insurance benefits, additional affordable housing preservation, and creation funds, and more. UNHP will be analyzing the plan and its impact as more guidelines and information s released. We know you have questions - that is why we are asking you to join us in conversation…
Zoom Webinar and Chat Session with UNHP about the Good News Now! -New Benefits and Information for Bronx Families and Individuals Now via The American Rescue Plan. Zoom Webinar El Plan de Rescate Americano ofrece buenas noticias inmediatas para muchas familias y personas del Bronx