President Biden signed the American Rescue Plan Act into law yesterday, triggering the release of $1,400 Economic Impact Payments along with tax breaks for stimulating the economy.
The top three tax highlights of the Act are the following:
The first $10,200 in unemployment benefits is exempt from Federal taxes for households earning up to $150,000.
There is a one-year expansion of the child tax credit to up to $3,600 per child.
The Employee Retention Credit is extended through the end of the year. In 2020, if you have the eligible wages, you can get a maximum for the year of a $5,000 credit per employee. For 2021, that goes up to $28,000 per employee, a 560 percent increase over 2020.
We are on top of all the new tax credits and will make sure that you take advantage of them if you are eligible. For our business clients, we can help you determine which wages are eligible for the Employee Retention Credit and prepare amended payroll tax filings to claim the ERC.
For full details on the American Rescue Plan Act of 2021, review this informative document from Wolters Kluwer.