AMERICAN RESCUE ACT PART ONE

American rescue act part one. The House of Representatives passed the American Rescue Plan Act, H.R. 1319 by a vote of 220-211. It was then signed into law by President Biden. Among the Act's many provisions are several tax items. Most of the tax provisions that were in the House version of the bill were unchanged in the Senate's version, but the tax treatment of 2020 unemployment benefits, the phaseout ranges for economic impact payments, and the treatment of student loan debt forgiveness were changed by the Senate. Unemployment Benefits. The act makes the first $10,200 in unemployment benefits tax free in 2020 for taxpayers making less than $150,000 per year. Recovery rebates. Te act creates a new round of economic impact payments to be sent to qualifying individuals. The same as last year's two rounds of stimulus payments, the economic impact payments are set up as advance payments of a recovery rebate credit. The act creates a new Sec. 6428B that provides individuals with a $1400 recovery rebate credit ($2800 for married couples filing jointly), plus $1400 for each dependent including college students and qualifying relatives who are claimed as dependents. As with last year's economic impact payments, the IRS will send out the advance payments of the credit. American rescue act part one.

For single taxpayers, the credit and corresponding payment will begin to phase out at an adjusted gross income of $75,000 and the credit will be completely phased out for single taxpayers with an AGI over $80,000. For married taxpayers who file jointly, the phaseout will begin at an AGI of $150,000 and end at an AGI of $160,000. And for heads of household, the phaseout will begin at an AGI of $112,500 and be complete at an AGI of $120,000. American rescue act part one.

COBRA continuing coverage. The act provides COBRA continuation coverage premium assistance for individuals who are eligible for COBRA continuation coverage between the date of enactment and September 30, 2021. The act creates a new Sec. 6432, which allows a COBRA continuation coverage premium assistance credit to taxpayers. The credit is allowed against the Medicare tax. The credit is refundable, and the IRS may make advance payments to taxpayers of the credit amount.

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