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$1.9 Trillion Stimulus Package Details

by | Mar 17, 2021 | COVID-19 | 0 comments

On Thursday, March 11 President Biden signed a $1.9 trillion stimulus bill into law. This historic legislation affects many aspects of our country’s economic recovery, and we wanted to share how it may influence your tax situation. Although this does not cover all the provisions in the new law, a few highlights around the unemployment changes and stimulus payment amounts are included:
  
2020 Unemployment Provision
For individuals who received unemployment pay last year, the new bill allows up to $10,200 of those funds to be excluded from taxable income. This could significantly impact your tax liability. If you’re affected by this change and we already processed your tax return we’ll reach out to you directly.
 
Stimulus Payment Package Amount Based on 2019 or 2020 Tax Return
For third-round stimulus payments, eligibility and amounts will be based on either your 2019 or 2020 return.
 
What this means

  • If your 2020 tax return isn’t filed and processed by the IRS when they process your third stimulus payment, then the IRS will use information from your 2019 tax return.
  • If your 2020 return is already filed and processed when the IRS is ready to send your payment, then your stimulus check eligibility and amount will be based on the information on your 2020 return.
  • If your 2020 return is filed and/or processed after the IRS sends you a third stimulus check, but before July 15, 2021 (assuming the tax deadline remains on April 15), the IRS will send you a second payment for the difference between what your payment should have been if based on your 2020 return.
  • On your 2021 return we will calculate the stimulus that would be received based on the income and if it is higher than what you received already – you’ll get a credit for the difference. If it is less, you will not have to pay back the difference.

 In summary, working with us on your tax return means we’re staying on top of these changes and how it affects your individual situation. If we feel your return should be put on extension or amended because it’s in your best interest, we’ll suggest that to you and explain the reason why.
 
Thank you for partnering with us and please reach out with any questions at Connect@its-taxes.com