June 16, 2021 - Douglas Myser

IRS overview of american rescue plan. The Internal Revenue Service has provided key aspects of tax provisions in the American Rescue Plan, and is urging taxpayers with children to file returns quickly for payments of the Child Tax Credit. Several provisions impact the 2020 tax return people are filing out this tax season, including one exempting up to $10,000 in unemployment compensation from tax and another benefitting many people who purchased subsidized health coverage through either federal or state health insurance marketplaces. The Law also includes a third round of Economic Impact Payments, now going out to eligible Americans, that are generally equal to $1400 per person for most people, as well as several other key changes for tax year 2021. You can look at all the new tax law changes on the IRS website IRS.GOV IRS overview of american rescue plan.

The IRS is urging taxpayers who have already filed the 2020 tax return to avoid amending return, refund claims or contacting the IRS about obtaining newly enacted tax benefits. Tax Resolution is available to those who end up owing the IRS and do not get a refund. Taking any of these actions now will not speed up a future refund and may even slow down an existing refund claim. For the tax year 2020, the first $10,200 of unemployment compensation is not taxable for most households. This tax benefit is only available to those whose modified adjusted gross income is below $150,000 during the 2020 tax year. The same income cap applies to all filing statuses. This means that those eligible who haven't filed a 2020 return yet can subtract the first $10200 from the total compensation received and only include the difference in their taxable income. For couples where both spouses received unemployment compensation, each spouse can subtract $10,200. For any eligible taxpayer who has already filed and reported their compensation as fully taxable, the IRS is automatically adjusting their return and providing them this tax benefit. Refunds, based on this adjustment are being issued and continuing this summer. You can learn more at the IRS website, IRS.GOV