The American Rescue Plan Act of 2021

The American Rescue Plan Act of 2021 expands additional benefits through the tax code and sets a threshold of $10,200 of unemployment income exemption.

The American Rescue Plan Act of 2021 makes a portion of unemployment income non-taxable for certain filers and eliminates repayment of excess funds received through the Advance Premium Tax Credit.

THE IRS WILL HANDLE UNEMPLOYMENT RETURNS AND HAS ADVISED AMENDED RETURNS NOT TO BE FILED AT THIS TIME.

We expect the IRS to issue final official guidance on these items very soon. The IRS has indicated it will recalculate taxes on these returns and adjust the taxpayer’s account accordingly. The IRS will then send any refund amount directly to the taxpayer.

Taxpayers looking to stay on top of news related to taxable unemployment benefits should check out the IRS Newsroom.

A reminder that the bill that provided funding for many This bill provides additional relief to address the continued impact of COVID-19 (i.e., coronavirus disease 2019) on the economy, public health, state and local governments, individuals, and businesses.

Specifically, the bill provides funding for:

Agriculture And Nutrition Programs, Including The Supplemental Nutrition Assistance Program (SNAP, Formerly Known As The Food Stamp Program);
Schools And Institutions Of Higher Education;
Child Care And Programs For Older Americans And Their Families;
COVID-19 Vaccinations, Testing, Treatment, And Prevention;
Mental Health And Substance Use Disorder Services;
Emergency Rental Assistance, Homeowner Assistance, And Other Housing Programs;
Payments To State, Local, Tribal, And Territorial Governments For Economic Relief;
Multiemployer Pension Plans;
Small Business Assistance, Including Specific Programs For Restaurants And Live Venues;
Programs For Health Care Workers, Transportation Workers, Federal Employees, Veterans, And Other Targeted Populations;
International And Humanitarian Responses;
Tribal Government Services;
Scientific Research And Development;
State, Territorial, And Tribal Capital Projects That Enable Work, Education, And Health Monitoring In Response To COVID-19; And
Health Care Providers In Rural Areas.

Note additional provisions included in the bill, as outlined by Congress:

Extension to unemployment benefits and exemption from income;
Student loan forgiveness to become tax-free through 2025;
Provide a recovery rebate of $1,400 per eligible individual;
Expand and otherwise modify certain tax credits, including the child tax credit and the earned income tax credit;
Provide premium assistance for certain health insurance coverage; and
Require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children’s Health Insurance Program (CHIP)

More information on the American Rescue Plan Act of 2021 on can be found at this link (includes the full text of the act)