Time to read: 6 minutes
2021 Stimulus Actions and Summary:
- Digestible explanation of the third stimulus payment to understand who will and who will not receive the payment.
- Unemployment benefits to extend until September 6 and decrease to $300 per week, along with an explanation of the unemployment tax forgiveness.
- Child Tax Credit, School, and COVID-19 Vaccination and Research, among other items addressed in the 2021 Stimulus bill.
As we hit the year mark since the coronavirus pandemic shut down the economy, another massive bill is coming out of Congress to provide continued aid. The 2021 Stimulus bill was passed on March 6. Congress has passed the final bill as of Wednesday, March 10. President Biden is said to sign the bill by Friday, making for a quick turnaround. To put this into context, former President Trump signed the March 2020 CARES Act a day after it passed congress. The December 2020 bill took multiple days to be processed and presented to former President Trump for signature. Signing this bill into law would mark the first legislative action from the Biden Administration.
The $1.9 trillion 2021 Stimulus Bill addesses the following:
- Third Stimulus Check.
- Unemployment and Tax Forgiveness.
- Child Tax Credit.
- Nationwide Vaccination Program and Continued COVID-19 Research.
- Infrastructure and Transportation Projects.
- Students Back into Schools.
- Local and State Government Financial Assistance.
Breaking Down the 2021 Stimulus Bill
Below we break down the most notable pieces of the $1.9 Trillion Stimulus: Third Stimulus Check, Unemployment, and Child Tax Credit.
Third Stimulus Check
As mentioned, the third round of stimulus checks will have more qualifications than the first two payments. This is to ensure money is reaching Americans in lower-income households.
Recipients Disqualified from the Third Stimulus:
- Single with Adjusted Gross Income (AGI) between $80K-$100K.
- Head of Household filers with AGI $120K-$150K.
- Married Couples filing jointly with AGI between $160K-$200K.
Under the House Bill, these groups would have received a partial payment, but will not under the bill approved by the Senate.
Under both House and Senate bill, the following are disqualified from the stimulus payments:
- Singles with AGI above $100K.
- Head of Household with AGI exceeding $150K.
- Joint filers with an AGI over $200K.
As for dependents, the bill allots $1,400 for dependents, each dependent in the family, regardless of age. For reference, the first and second stimulus bills granted extra payments for dependents 16 years older or younger. This bill now includes money for college students 23 years old or younger as well as elder parents or relatives living with you.
Payments will be based on either 2019 or 2020’s tax return, depending on your filing status for 2020. Therefore, if you have yet to complete your 2020 tax return or the IRS has yet to process your submitted 2020 tax return, your information from 2019’s tax return will be considered. If you have filed your 2020 tax return and it has been processed, 2020 will be considered. These considerations are also dependent on timing.
A second stimulus payment of the difference will be sent to you if the IRS has already sent your first payment based on 2019’s tax return and it is before July 15 (September 1 if the April 15 filing deadline is pushed). These stimulus payments will not be taxed nor is repayment required once you file your 2020 tax return.
Note: Tax Day 2021 is still in effect for April 15. The only Americans exempt from this deadline are those affected by the Texas and Oklahoma winter storms in February.
Unemployment Supplement and Tax Forgiveness
The bill allows for unemployment supplements to continue through early September. While the duration of the aid was extended by the House (a decrease from an earlier Senate bill), the weekly payments will decrease to $300 per week. Unemployment is taxable and must be reported on tax returns, including the unemployment payments under the previous COVID-19 relief. Americans are now getting hit with these high tax bills. However, the Senate’s amendment of the bill states up to $10,200 per person in last year’s unemployment payments would be exempt from taxes for 2020 filing. The tax break is retroactive, and recipients of the unemployment aid would get the tax break from unemployment collected in 2020, but not 2021.
If you already filed your taxes and collected unemployment, you would have to file an amended tax return as soon as the bill is passed to benefit from this tax change.
Child Tax Credit
The bill expands the Child Tax Credit. For reference, the previous tax credit allows families to claim up to $2,000 in credit for children under 17 years old. Another part of the bill approval extends the benefit to lower-income families who otherwise would not receive the credit. The Child Tax Credit allows:
- Claim up to $3,600 per year for a child under 6 and up to $3,000 per year for those between the ages of 6 and 17.
- Must make $2,500 a year to receive the credit and makes the credits fully refundable.
- Extends the tax credit for one year to help with childcare costs, and recipients could get back as much as half their spending on childcare.
Remaining Items of the 2021 Stimulus
Schools: $170 Billion is marked to help in getting K-12 students back to in-person learning.
Vaccination and Research: $50 Billion is marked to go towards continued COVID-19 research. $20 Billion is marked to implement a nationwide vaccination program.
Transportation and Infrastructure: $40 Billion is marked for infrastructure and transportation projects, such as public transit and airports.
Local and State Government Assistance: $350 Billion will go towards local and state governments to help individual economies recover.
COVID-19 Updates with Profiles
Profiles continues to monitor the business and economic climate. Stay updated through our Coronavirus Updates as we continue to provide digestible content on hiring, job searches, working remotely, and other relevant topics.
