With the recent passage of the $1.9 Trillion American Rescue Plan, many Americans will receive needed financial relief as we continue to navigate the COVID-19 pandemic. While many provisions of the plan are complex, there are several pieces of the legislation that will directly affect many families right here in our local community.

As your financial advisors, we wanted to break down the highlights of the bill, giving you the tools you need as you await your financial relief.

$1,400 checks to millions of Americans

• Checks will arrive in accounts starting this week.
• Provides a $1,400 refundable tax credit to individuals ($2,800 for joint filers) with up to $75,000 in adjusted gross income ($112,500 for heads of household and $150,000 for married couples filing jointly).
• Provides $1,400 for dependents (both child and non-child).
• Definition of dependent now includes children under age 19 and full-time students under age 24 (previous definition was limited to children under age 17).
• Credit phases out entirely for income above $80,000 (or $120,000 for heads of household and $160,000 for married couples filing jointly). The credit is reduced between $75,000 and $80,000 (or $112,500 and $120,000 for heads of household and $150,000 and $160,000 for married couples filing jointly).

Parents can receive the expanded child tax credits this summer

• Increases the child tax credit amount for 2021 only, to $3,600 for children under 6, and to $3,000 for children ages 6 to 17; expands definition of "qualifying child" to include 17-year-olds.
• Eligibility phases out for taxpayers with income of $75,000 to $200,000 (single) and $150,000 to $400,000 (married filing jointly).
• IRS will send out payments directly on a periodic basis if individuals choose, or you may wait until the next tax filing season to claim the expanded credit.

Have you lost your job? You may be eligible for a tax waiver on unemployment benefits

• Federal income taxes will be waived on the first $10,200 of unemployment compensation received in 2020 for households earning less than $150,000.
• Contact the IRS or a tax professional for exact details.

Student loan borrowers may enjoy tax-free forgiveness

• Tax-free student loan forgiveness for all student loan types through December 31, 2025 including loan forgiveness after 20 or 25 years in an income-driven repayment plan. Future student loan forgiveness programs will be included as well.
• New legislation affects loans “modified or discharged” between December 31, 2020 and January 1, 2025, and include both private and institutional loans. Contact specific lender for details if applicable.

As always, we encourage you to work with your financial advisor, tax professional, or accountant for specific needs surrounding these relief programs. If you have any questions, please feel free to reach out to our planning team, or your wealth advisor.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax  or accounting advice. You should consult your own tax and accounting advisors for more information.