The American Rescue Plan (ARP) Act provides a wide array of 2020 tax-related benefits for individuals. The following is a brief summary of some key tax breaks included in the new law.
These 4 areas are affected in 2020, do they apply to you?
- Stimulus Payments
- $150,000 in household income
- Earned Income Credits
ARP exempts from federal income tax up to $10,200 of unemployment benefits received in 2020 by a family with an AGI under $150,000. Normally, those benefits would be fully taxable. This tax break is intended to help taxpayers who might be blindsided by an unexpected tax bill on their 2020 returns.
Economic stimulus payments 2020
For taxpayers who welcomed a new tax deduction (baby) into the world in 2020, you are eligible to receive the first 2 stimulus payments, totaling $1,100 for families earning less than $200,000 annually. This can be claimed on your 2020 tax filing.
$150,000 in household income
Household income has always been an important part of federal tax. The last 12 months have proven more crucial than ever before. Eligibility for many of the tax credits or stimulus payments revolves around this household income total.
If your family made more [or] less in 2020 vs 2019, it will make an impact on your stimulus payments and when you should file your 2020 tax return.
Earned Income Credits
Each taxpayer has the opportunity to elect whether to use their 2019 Adjusted Gross Income (AGI) vs the 2020 AGI if the net tax result is in their favor.
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