Biden Signs New $1.9 Trillion COVID Relief Legislation into Law
As you might imagine, $1.9 trillion covers a lot of ground. Here are the provisions that we believe will be of greatest interest to you.
- Unemployment Benefits
- If you made less than $150,000 last year, the first $10,200 of unemployment benefits received is tax-exempt. If you have already filed your 2020 federal return, you will need to amend that return to capture a refund.
- Recovery Rebates
- $1,400 per single taxpayers including dependents earning less than $75,000 (married taxpayers earning less than $150,000).
- Payments phase out fully at $80,000 single and $160,000 married. Calculate your rebate here.
- Your 2019 federal tax return will be the income measure unless you have already filed your 2020 federal return.
- Child Tax Credit
- Changes apply to 2021 only.
- $3,600 per child credit ages 0-5, $3,000 per child credit ages 6-17.
- Credit phase out once income hits $75,000 for single taxpayers, $112,500 for head of household taxpayers, and $150,000 for married taxpayers.
- IRS to estimate monthly advance payments to taxpayers with a reconciliation of actual credit eligibility made on the 2021 federal tax return.
- Child and Dependent Care Credit
- Changes apply to 2021 only.
- Credit increased to $4,000 per child with an overall maximum of $8,000.
- Family and Sick Leave
- Employer payroll credit up to $12,000 per employee for COVID-related sick leave.
- Benefit extended to September 30, 2021.
- COVID vaccination leave is eligible.
- Employee Retention Credit
- Extends the credit eligibility period through the end of the year.
- Quarterly revenue decline triggering eligibility is 20%. (Consolidated Appropriations Act)
- Eligible wages are $10,000 per employee per quarter. (Consolidated Appropriations Act)
- Credit percentage is 70% of eligible wages (Consolidated Appropriations Act), resulting in a possible credit per employee of $28,000.
by Trey Whitt, Partner, DentMoses, LLP, Birmingham, AL
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