The American Rescue Plan was recently passed, but do you know all the changes it will bring?
You probably already know about the stimulus checks, but you may not know how it could affect your taxes and healthcare. This latest economic stimulus package could contain substantial changes for your tax planning.
Who qualifies for the third installment of stimulus checks?
The third round of stimulus checks may be the most widely known part of the American Rescue Plan. These checks are capped at $1400 per person. Although the income range of those who qualify has narrowed, many people who were not previously eligible for stimulus checks will be eligible for round 3.
The age range for dependents has been expanded to those in college and older high school students, whereas with the previous rounds of stimulus, dependents were limited to ages 16 and under.
Listen in to find out how the income bracket for stimulus checks has changed and learn how you could use this stimulus package as an opportunity for careful tax planning.
How have health insurance premiums changed?
If you were laid off or terminated like many others last year, your company must continue to offer health insurance through COBRA. The drawback with COBRA is that the full cost of the insurance premium was placed solely on the participant without the employer absorbing a share.
The American Rescue Plan will now fully subsidize the premiums of COBRA until September of 2021, which is a sizable cost for many.
That wasn’t the only change in health insurance premiums through the ARP. Find out how the thresholds of the Affordable Care Act have changed with the bill as well. Press play to hear how.
Changes to the child tax credit and the dependent care tax credit may have you rethinking your tax planning strategy
Most people don’t pay attention to their taxes until the time comes for them to file. But maybe after listening to this episode you may want to start getting in front of your taxes and plan the year ahead rather than focus on the previous year.
If you have children, then this year is an especially good time to consider tax planning. You’ll want to take advantage of the expanded tax credit that went from $2000 to $3000 and $3600 for children under 6 years old. In addition to the child tax credit, the child dependent care tax credit was expanded to max out at $8000 per child.
Changes to unemployment compensation
Lastly, the American Rescue Plan has extended state and federal benefits to unemployment compensation until September 6. Lawmakers also chose to make unemployment compensation tax-free for 2020.
Listen in to hear all the details so that you can develop a plan to utilize these changes in your tax planning efforts. This may be a good year for you to consult a CPA to help you file your taxes.
Outline of This Episode
- [1:20] Stimulus checks part 3
- [9:10] Health insurance
- [15:54] The new child tax credit
- [23:54] The child dependent care tax credit
- [27:20] Changes in unemployment compensation
- [32:00] You may want to reach out to a CPA this year
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