Congress has passed a $1.9 trillion COVID Relief Bill, which the president has signed into law on March 11th, 2021. With the passing of this bill, individuals will receive $1,400 per person (tax free), previously $600 per person in the last relief package, and originally $1,200 per person in the first relief package. Individuals will also receive up to $1,400 per dependent (tax free), including adult dependents, previously $600 per dependent in the last relief package, originally $500 per dependent in the original relief package. Just like the last two relief packages, this one is also subject to Adjusted Gross Income (AGI) limits. What this means is that payment amounts will be reduced based on the amount an individual makes above the AGI phaseout limits.
Many corporate transferees or assignees will lose some, if not all, of their stimulus checks due to benefits and reimbursements received from a 2019 and/or 2020 move or assignment. Single employees earning approximately $75,000 to $80,000 and married employees earning between $150,000 to $160,000 are the most likely group to be adversely affected. Ineo offers a stimulus tax analyzer to determine if any of your employees may have been negatively affected by a 2019 and/or 2020 move or assignment, thus losing all or part of a potential stimulus payment. Please contact David Oltman, SCRP at firstname.lastname@example.org to receive a one-page worksheet.
Adjusted Gross Income (AGI) – Tax Year 2019 IRS Form 1040 – line 8b – AGI Phaseout Limits
Adjusted Gross Income (AGI) – Tax Year 2020 IRS Form 1040 – line 11 – AGI Phaseout Limits
Individuals filing as Single will receive a $1,400 stimulus check if their AGI is $75,000 or lower. If their AGI is $80,000 or above, they will be phased out of receiving the stimulus check altogether.
Married Filing Jointly
A couple filing as Married Filing Jointly without any children will receive a $2,800 stimulus check if their AGI is $150,000 or lower. If their AGI is $160,000 or above, they will be phased out of receiving the stimulus check all together. A family of five would receive $7,000 tax free dollars if their AGI is under $15,000.
Child Tax Credit
The credit, which was at a maximum of $2,000, is now raised to as much as $3,600 per child under age 6 and $3,000 per child between the ages of 6 and 16 for 2021. 50% of the child tax credit is expected to be paid out in monthly installments starting in July of 2021 and will include more low-income households. These credits are also subject to AGI phase-out limitations.