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 Member Update
Important Tax Implications
TBy Lisa Grossman Ben-Tal, Certified Public Accountant
he American Rescue Plan Act of round of stimulus payments up to $1,400 for adults 2021, also called the COVID-19 and any dependents. The payments begin to phase Stimulus Package or American out at $75,000 for single filers, $112,500 for Head Rescue Plan, is a $1.9 trillion of Household filers, and $150,000 for joint filers. economic stimulus bill signed into Households with earnings of more than $80,000 for law by President Joe Biden on single filers, $120,000 for Head of Household filers, March 11, 2021 to speed up the and $160,000 for married filing jointly filers are not
United States’ recovery from the economic and health eligible to receive any payment.
impacts of the COVID-19 pandemic and the ongoing recession. The economic stimulus package builds upon many of the measures in the CARES Act from March 2020 and in the Consolidated Appropriations Act from December 2020. Several changes impacting taxes are included in the American Rescue Plan Act and in other new regulations and have been summarized in this article.
The Internal Revenue Service (IRS) has announced that the Federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021 to May 17, 2021, without penalties and interest, regardless of the amount owed.
The postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest, and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17th. This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15, 2021. California has also conformed to these deadlines.
The American Rescue Plan Act provides a third
The American Rescue Plan Act extends the three federal unemployment insurance expansions (first initiated under the CARES Act) through September 6, 2021. The American Rescue Plan Act increases the total number of weeks of unemployment benefits available to individuals who cannot return to work safely from 50 weeks to 79 weeks, matching the expiration of the broader unemployment insurance benefits. The Act also keeps in place the Federal supplement at its current level of $300 per week for weeks beginning after March 14th and before September 6, 2021. The American Rescue Plan Act provides 53 weeks of federal unemployment insurance benefits after the state benefits end, for up from 24 weeks. The Act also provides a 100% subsidy of COBRA health insurance premiums so that unemployed workers can remain on their former employer’s healthcare plans through the end of September.
The American Rescue Plan Act contains a new provision to exempt $10,200 of unemployment benefits received in 2020 from income taxes for individuals with incomes below $150,000. The IRS is working with tax preparation software to create a “fix” for this new retroactive provision. Therefore, all 2020 tax returns reporting unemployment income are not being filed at the moment until the tax software may be updated. Any returns that have already been filed with unemployment income will be revisited as

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