Todd's Tax Service LLC

Todd's Tax Service LLC

Covid Relief - American Rescue Plan of 2021

The "American Rescue Plan" is over 600 pages in length. Major changes to the taxation of unemployment (2020) and calculation of premium subsidies for taxpayers who purchase health insurance on the "exchange" are included in the new law.  


Taxpayers with incomes below new thresholds ($80,000 Single , 120,000 Head of Household, and $160,000 Married Filing Joint) can expect a new stimulus payment of up to $1,400 per taxpayer.

Dependents up to age 18 may now qualify as well. Students may now qualify. Taxpayers who do not receive the $1,400 stimulus payment in 2021 may potentially include it on their 2021 tax return when they file in 2022.


Up to $10,200 of unemployment benefits received in 2020 may be excluded from income. For taxpayers who have already filed their 2020 tax return and not taken the exclusion, the IRS will automatically adjust the return and send a refund due to this change in tax law which occurred after many taxpayers filed their 2020 returns.


State changes are potentially forthcoming. No information is available. No specific laws have been passed or even proposed, however, there have been discussions.


Business owners and farmers should contact their bankers for information on low interest loan programs for owners who have been adversely affected by the pandemic.


Business owners with employees should contact a CPA about various changes to payroll tax laws and payroll retention credits.


The new legislation places extraordinary demands on an already stressed IRS. Long delays are possible in processing certain returns and issuing refunds. These delays could be a few days or 6-12 weeks or longer.


Calling the IRS is not usually a good idea. Most questions can be answered by reviewing information already posted at irs.gov or this website.