April 17, 2021 - Douglas Myser

Tax provisions of stimulus bill. The tax provisions included in the $1.9 trillion dollar stimulus bill signed into law by President Biden include a new round of economic impact payments, a tax credit for COBRA continuation coverage, and the expansion of several other tax credits.  The House passed the bill, the American Rescue Plan Act of 2021 by a vote of 219-212 and it was eventually signed into law by President Biden. Recovery Rebates. Subtitle G of the bill, titled "Promoting Economic Security." enacts a new Sec. 6428B that provides individuals with a $1400 recovery rebate credit ($2800 for married taxpayers filing jointly) plus $1400 for each dependent for. As with the two recovery rebates enacted in 2020, the IRS will make advance payments, which the Service has been calling economic impact payments. These stimulus checks can keep taxpayers out of debt and alleviate the need they have for tax resolution. The recovery rebate credit phases out for taxpayers with adjusted gross income (AGI) over $75000 ($150,000 for married filing jointly). Tax provisions of stimulus bill.

The bill uses 2019 AGI to determine eligibility, unless the taxpayer has already filed a 2020 tax return. COBRA continuation coverage. Subtitle F of the bill, titled "Preserving Health Benefits for Workers,"  provides COBRA continuation coverage premium assistance for individuals who are eligible for COBRA continuation coverage between the date of enactment and Sept. 21, 2021. The bill creates a new Sec. 6432, which allows a COBRA continuation coverage premium assistance credit to taxpayers. The credit is allowed against the Sec. 3111 (b) Medicare tax. The credit is refundable, and the IRS may make advance payments to taxpayers of the credit amount. The credit applies to premiums and wages paid after April 1, 2021. Under the new Sec. 6720C, a penalty is imposed for failure to notify a health plan of cessation of eligibility for the continuation coverage premium assistance. Taxpayers who receive the COBRA continuation coverage premium assistance credit are not also eligible for the Sec. 35 health coverage tax credit. The number of days a self employed individual can take into account in calculating the qualified family leave equivalent amount for self employed individuals increases from 50 to 60, The paid leave credits will be allowed for leave that is due to a COVID vaccination. Tax provisions of stimulus bill.

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