Covid-19 Individual Relief Update
HICKMAN & HICKMAN, PLLC
CERTIFIED PUBLIC ACCOUNTANTS
UPDATED OCTOBER 18, 2021
Dear valued H&H clients,
As the coronavirus (COVID-19) continues to affect local communities and global economies, you may have concerns about your financial well-being. Or you may be wondering about how recently passed legislation impacts you. We’re providing a high-level summary of some of the key provisions impacting individuals. We are experiencing information overload and highly encourage you to digest some of the relief now available. As this crisis continues to evolve, we will update you with the latest information we can to the best of our ability.
There are several recently enacted tax changes and new or expanded benefits that might be helpful to you, but watch out for potential Coronavirus related scams! Learn more about how to take extra precautions HERE.
American Rescue Plan 2021 Highlights:
2021 Tax Year
- Stimulus Payments
- Stimulus payments to individuals of $1,400 ($2,800 for joint filers) plus $1,400 for each qualifying dependent, including children who are full-time students under the age of 24 and adult dependents, are expected to be sent out beginning March 12, 2021.This payment will be reconciled on your 2021 income tax return.
- The stimulus payments begin to phase out for taxpayers with adjusted gross income (AGI) above $150,000 for joint filers, $112,500 for heads of households and $75,000 for other individuals. See the link to help with any questions you may have: https://www.irs.gov/newsroom/irs-begins-delivering-third-round-of-economic-impact-payments-to-americans
- Child Tax Credits
- The child tax credit has increased to $3,000 per child ($3,600 per child under 6 years). 17-year-old children will qualify for this credit. The credit now is a 100% refundable credit.
- Beginning in July 1, 2021 thru December 31, 2021, eligible taxpayers will begin receiving an advance monthly payment of this credit. This credit will need to be reconciled on the 2021 individual tax return.
- The child tax credit begins to phase out for taxpayers with adjusted gross income (AGI) above $150,000 for joint filers, $112,500 for heads of households and $75,000 for other individuals.
- If an excess amount of the allowable child tax credit is received, then you may have to repay the excess when you file your 2021 income tax return.
- Child and Dependent Care Credit
- The child and dependent care credit has increased to $8,000 for one qualifying child and $16,000 for more than one qualifying child. This credit is now a 100% refundable credit.
- The child and dependent care credit phase out for taxpayers with adjusted gross income (AGI) in excess of $125,000 for individual filers and $440,000 for joint filers.
- If you were over 70 ½ at Dec. 31, 2019 you won’t have to take required minimum distributions (RMD) until the age of 72. If your retirement assets have taken a hit, not having to take an RMD may allow those assets to recover some value before you liquidate them.
- If you have a federally-held student loan, your payments will be suspended through January 31, 2022 and interest won’t accrue during this period. Note that this relief does not apply to private student loans. For more information visit: https://studentaid.gov/announcements-events/coronavirus
For more relief information visit: https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments
Protecting our clients and staff
There are limitations on our physical work environment due to COVID-19; however, we’re working to minimize disruptions and impacts to you so that we can still offer the same level of service and support you have come to expect from our team.
We have implemented procedures to protect the health and safety of our staff, clients and community including temporarily closing our lobby for document drop off and pickup as well as postponement of face to face meetings. Some of us are working remotely and others have staggered hours. We are available for phone conferences and video conferencing and as always, you are able to call our office to schedule a conference. Please have patience with us as we navigate through this unpredictable time in trying to meet your needs.
Our commitment to you
We care deeply for our community and whether you have tax, payroll or tax planning questions or need advice on ways to navigate the expanded benefits outlined above, we want to be available to help you.
During this unpredictable and challenging time, it’s more important than ever to stay connected. We’re in this together and our thoughts go out to all that have been impacted by this extraordinary situation.
Hickman & Hickman, PLLC