Economic Highlights of the American Rescue Plan Act of 2021
The American Rescue Plan Act, which was signed into law on March 11, 2021, carries a $1.9 trillion price tag and provides funding for a range of categories impacting individuals, families and businesses across the country. It is one of the largest economic rescue plans in United States history and its purpose is to help the country recover from the economic and health effects of the COVID-19 pandemic.
Direct Financial Payments
Individuals with an adjusted gross income of less than $75,000 and married couples with an adjusted gross income of less then $150,000 will receive the full stimulus payment of $1,400, as will each of their qualified dependents. The stimulus payment is phased out at adjusted gross incomes over these amounts, disappearing entirely at $80,000 and $160,000 respectively. If you have already filed your 2020 income tax return, the IRS, who will issue the payments, will use that tax return to determine your filing status, AGI and number of dependents. If you have not filed your 2020 income tax return, the IRS will look to your 2019 return.
Extended Unemployment Benefits
You may recall that the CARES Act passed in 2020 contained an extra unemployment benefit of up to $600 per week. Although these Pandemic Unemployment Assistance (PUA) benefits have been reduced to $300 per week, they have been extended through September 6, 2021, and the total number of weeks available has been increased from 50 to 79. Also, if you received unemployment benefits in 2020, the first $10,200 of them is tax free for families making $150,000 or less. Finally, the Act provides a 100% subsidy of COBRA health insurance premiums so that unemployed workers can remain on their employers’ health plans through the end of September 2021. Employers will receive a credit for the subsidy through a refundable tax credit against the employer’s quarterly taxes.
Expanded Child Tax Credit
For income tax returns filed in 2020, the child tax credit is worth $2,000 per child under the age of 17, which begins to phase out for individuals with an adjusted gross income of $200,000 and for married couples with an adjusted gross income of $400,000. This child tax credit has been temporarily expanded for 2021 to (1) include 17-year-old dependents; (2) increase the credit to $3,000 per child ($3,600 per child under age 6); (3) make the credit fully refundable; (4) allowing half of the credit to be received in advance by having the IRS send monthly payments from July 2021 to December 2021. Of course, the expanded credit begins to phase out for individuals making more than $75,000 and for couples making more than $150,000.
Paycheck Protection Program
Although the Act injects an additional $7.25 billion into the program, it does not extend the program beyond the current expiration date of March 31, 2021. What it does do is make it available to more types of organizations, including additional non-profit organizations and internet-only news and periodical publishers with more than one physical location.
SBA Assistance for Restaurants and Bars, and Shuttered Venue Operators
The Act establishes a $29 billion Restaurant Revitalization Fund to be used by restaurants and bars, as well as other venues where food and alcohol are consumed such as food trucks, brewpubs, and caterers. Grants of up to $10 million per entity or $5 million per physical location will be calculated by subtracting 2020 revenue from 2019 revenue. The grants can be used for expenses such as payroll, rent and PPE, and the SBA will prioritize applications from venues owned and operated by women, veterans, and socially and economically disadvantaged individuals during the first 21 days of the program. An additional $1.25 billion will be dedicated to the live entertainment industry through the Shuttered Venue Operators Grant program.
Homeowner Assistance Fund
Although the foreclosure moratorium, which expires on March 31, 2021, has not been extended, the Act created a $9.961 billion fund to be disbursed to the states to allow them to provide assistance to homeowners in the form of mortgage payment assistance, costs of reinstatement or other costs following a default or forbearance period, mortgage principal reduction, facilitation of mortgage interest reductions, and payment assistance for utilities, internet, insurance premiums, and condo fees.
To hear more about the American Rescue Plan Act of 2021 and financial planning during a pandemic, be sure to register for our March 17th webinar by clicking here.
Ask Winston: Party Favors
Hook Law Center: Winston, my daughter received a live goldfish as a birthday party favor and it made me wonder if there are laws against this type of thing.
Winston: Wow. That is a pretty interesting party favor, but believe it or not, it is probably legal to receive one at a birthday party. It is not legal, however, in Athens-Clarke County, Georgia, to entice someone to play a game of bingo by giving away goldfish. In fact, “no person in Athens-Clarke County shall give away any live animal, fish, reptile or bird as a prize for, or as an inducement to enter, any contest, game, or other competition, or as an inducement to enter a place of amusement…”[i]
[i] The Code of Athens-Clarke County, Georgia, Sec. 4-1-9