1/?
OK, the House passed the American Recovery Plan LATE Friday evening, so let's do this thing...
For starters, here's the bill text: docs.house.gov/billsthisweek/…
At 'just' 592 pages, it's a relatively brisk read compared to the 6k-page Consolidated Appropriations Act December...
OK, the House passed the American Recovery Plan LATE Friday evening, so let's do this thing...
For starters, here's the bill text: docs.house.gov/billsthisweek/…
At 'just' 592 pages, it's a relatively brisk read compared to the 6k-page Consolidated Appropriations Act December...
2/
...The most important thing to know at this point is this is NOT law yet. And for that matter, there's about a 0% chance this EXACT bill becomes law.
Dems seem resigned to passing this round of stimulus relief w/out bipartisan support (that many had hoped for)...
...The most important thing to know at this point is this is NOT law yet. And for that matter, there's about a 0% chance this EXACT bill becomes law.
Dems seem resigned to passing this round of stimulus relief w/out bipartisan support (that many had hoped for)...
3/
...To do that, Dems will use the legislative process known as Reconciliation.
2🗝️things to know about Rec:
1) It allows the Senate to pass a bill w/ 'just' a simple majority (vs the 60 votes it normally takes for cloture)
2) It can only contain budget-related provisions...
...To do that, Dems will use the legislative process known as Reconciliation.
2🗝️things to know about Rec:
1) It allows the Senate to pass a bill w/ 'just' a simple majority (vs the 60 votes it normally takes for cloture)
2) It can only contain budget-related provisions...
4/
...Budget-related provisions are those dealing w/ revenue (read "taxes"), spending ("read appropriations"), and the debt ceiling.
Notably, the House-passed version of ARP includes a provision that creates a $15/hour Fed minimum wage.
This CANNOT be included in a Rec bill...
...Budget-related provisions are those dealing w/ revenue (read "taxes"), spending ("read appropriations"), and the debt ceiling.
Notably, the House-passed version of ARP includes a provision that creates a $15/hour Fed minimum wage.
This CANNOT be included in a Rec bill...
5/
The Senate Parliamentarian decided that last week.
Basically, the Parliamentarian is like the impartial Senate-rules referee. They don't make the laws, they just interpret them and make sure that they're followed.
So, the Senate version of ARP will NOT have the min wage...
The Senate Parliamentarian decided that last week.
Basically, the Parliamentarian is like the impartial Senate-rules referee. They don't make the laws, they just interpret them and make sure that they're followed.
So, the Senate version of ARP will NOT have the min wage...
6/
...provision included in House bill. Instead, Senate either:
-Passes it w/ a more Rec-friendly min wage workaround (like this thehill.com/homenews/senat…)
-Drops min wage provision altogether
Either way, Ds WILL find a way to get this through the Senate via Rec. As they say...
...provision included in House bill. Instead, Senate either:
-Passes it w/ a more Rec-friendly min wage workaround (like this thehill.com/homenews/senat…)
-Drops min wage provision altogether
Either way, Ds WILL find a way to get this through the Senate via Rec. As they say...
7/
OK... let's get into the bill provisions...
Those who have been hoping for additional stimulus payments will be happy to hear there's more of that in this bill.
More specifically, ARP calls for a stimulus check of $1,400 per taxpayer + for each of a taxpayer's dependents...
OK... let's get into the bill provisions...
Those who have been hoping for additional stimulus payments will be happy to hear there's more of that in this bill.
More specifically, ARP calls for a stimulus check of $1,400 per taxpayer + for each of a taxpayer's dependents...
8/
Note here that there's a SIGNIFICANT change from earlier stimulus checks. ARP calls for $1,400 per DEPENDENT.
That means add'l stimulus for taxpayers w/ college-age or elderly dependents... which they did NOT get for either 2020 stimulus payments.
Big deal for some...
Note here that there's a SIGNIFICANT change from earlier stimulus checks. ARP calls for $1,400 per DEPENDENT.
That means add'l stimulus for taxpayers w/ college-age or elderly dependents... which they did NOT get for either 2020 stimulus payments.
Big deal for some...
9/
... Another🗝️difference is that ARP phaseouts are as follows:
- Married Filing Joint: $150k-$200k
- Single: $75k-$100k
- HOH: $112.5k-$150k
Note the 'hard' top of the range. CARES/CAA had 'soft' tops. $5 less check for ever $100 over phaseout start.
Dare I say, again...
... Another🗝️difference is that ARP phaseouts are as follows:
- Married Filing Joint: $150k-$200k
- Single: $75k-$100k
- HOH: $112.5k-$150k
Note the 'hard' top of the range. CARES/CAA had 'soft' tops. $5 less check for ever $100 over phaseout start.
Dare I say, again...
10/
Stimulus payments will be based on either 2019 or 2020 income (whichever is the most current on file w/ the IRS.)
🚨RED ALERT🚨
Planning pointer: DELAY FILING YOUR 2020 RETURN IF YOUR 2019 INCOME WAS LOWER (and would give you a bigger stimulus payment if/when this passes)!
Stimulus payments will be based on either 2019 or 2020 income (whichever is the most current on file w/ the IRS.)
🚨RED ALERT🚨
Planning pointer: DELAY FILING YOUR 2020 RETURN IF YOUR 2019 INCOME WAS LOWER (and would give you a bigger stimulus payment if/when this passes)!
11/
And as a reminder, you won't have to pay those amounts back. See (poorly) updated image below.
And as a reminder, you won't have to pay those amounts back. See (poorly) updated image below.
12/
ARP also calls for an enhanced Child Tax Credit.
Current credit = $2k/child <17
ARP would change that for 2021 ONLY to:
-$3,600 per child under 6
-$3k for children 6 THROUGH 17
"Extra' 2021 amounts subject to lower phaseouts starting at:
- Single: $75k
- Married: $150k
ARP also calls for an enhanced Child Tax Credit.
Current credit = $2k/child <17
ARP would change that for 2021 ONLY to:
-$3,600 per child under 6
-$3k for children 6 THROUGH 17
"Extra' 2021 amounts subject to lower phaseouts starting at:
- Single: $75k
- Married: $150k
13/
Beyond that, things get messy. Real messy.
Half the credit is to be paid in advance, beginning in July🤔, based on 2019/2020 income (most recent on file).
BUT, unlike the stimulus checks, this CAN be clawed back on the 2021 return in certain situations...
Beyond that, things get messy. Real messy.
Half the credit is to be paid in advance, beginning in July🤔, based on 2019/2020 income (most recent on file).
BUT, unlike the stimulus checks, this CAN be clawed back on the 2021 return in certain situations...
14/
...Higher Child Tax Credit amounts are something Biden Admin has called for making permanent.
But ARP would only change 2021.
My guess: They limited it here to keep the price tag below $2 trillion, and will include the 'permanent' change in another bill later this year...
...Higher Child Tax Credit amounts are something Biden Admin has called for making permanent.
But ARP would only change 2021.
My guess: They limited it here to keep the price tag below $2 trillion, and will include the 'permanent' change in another bill later this year...
15/
Also significantly enhances the Child and Dependent Care Credit for 2021 (only) by making credit:
- FULLY refundable😯
- Max of $4k for 1 child, $8k for 2 or more children😮💰
This is another change Biden Admin wants to make permanent. Same logic as above applies here...
Also significantly enhances the Child and Dependent Care Credit for 2021 (only) by making credit:
- FULLY refundable😯
- Max of $4k for 1 child, $8k for 2 or more children😮💰
This is another change Biden Admin wants to make permanent. Same logic as above applies here...
16/
Also some important Earned Income Tax Credit changes.
- For 2021 only, taxpayers w/out kids can be as young as 19 (current 25), have modestly higher income, and receive greater credit %
- 'PERMANENTLY' allows MFS (that's married filing separate, not... well...) to claim...
Also some important Earned Income Tax Credit changes.
- For 2021 only, taxpayers w/out kids can be as young as 19 (current 25), have modestly higher income, and receive greater credit %
- 'PERMANENTLY' allows MFS (that's married filing separate, not... well...) to claim...
17/
the credit if they live with a qualifying child for more than half of the year
In important news for struggling employers, the Employee Retention Credit is extended through the end of 2021.
Interestingly/oddly it changes the credit to be a refundable Medicare Tax credit...
the credit if they live with a qualifying child for more than half of the year
In important news for struggling employers, the Employee Retention Credit is extended through the end of 2021.
Interestingly/oddly it changes the credit to be a refundable Medicare Tax credit...
18/
For those who continue to struggle finding employment and are on unemployment (currently about 5MM people🙁), there's (relatively) good news.
- Benefits set to expire March 14 would be extended through August 29th
- The 'extra' $300/week on top of state benefit is...
For those who continue to struggle finding employment and are on unemployment (currently about 5MM people🙁), there's (relatively) good news.
- Benefits set to expire March 14 would be extended through August 29th
- The 'extra' $300/week on top of state benefit is...
19/
increased to $400/week.
- Pandemic Emergency Unemployment Comp is also extended through August 29th (this is the unemployment program for self-employed individuals and others who don't qualify for state benefits)
And in other good (relatively) news for those who...
increased to $400/week.
- Pandemic Emergency Unemployment Comp is also extended through August 29th (this is the unemployment program for self-employed individuals and others who don't qualify for state benefits)
And in other good (relatively) news for those who...
20/
have been laid off, or will be laid off. There is a provision that would pay for 85% of COBRA coverage for individuals and their families through the end of September.
To qualify, you can't be eligible for Medicare, or other group health coverage, and you can't quit!
...
have been laid off, or will be laid off. There is a provision that would pay for 85% of COBRA coverage for individuals and their families through the end of September.
To qualify, you can't be eligible for Medicare, or other group health coverage, and you can't quit!
...
21/
👀Woah.
Here's a REALLY interesting provision I haven't seen getting much attention. Its a stealth tax provision that would stop the 415 limit for retirement plans from inflating after 2030.
This is the "Overall Limit" ("Annual Additions Limit") for plans (58k for 2021)...
👀Woah.
Here's a REALLY interesting provision I haven't seen getting much attention. Its a stealth tax provision that would stop the 415 limit for retirement plans from inflating after 2030.
This is the "Overall Limit" ("Annual Additions Limit") for plans (58k for 2021)...
22/
This is actually an incredibly sneaky provision.
Has the effect of limiting retirement contributions long-term, which increases taxes, without actually 'cutting' anything.
Also doesn't take effect for about 10 years, so plenty of time to reverse once people find out🤷♂️...
This is actually an incredibly sneaky provision.
Has the effect of limiting retirement contributions long-term, which increases taxes, without actually 'cutting' anything.
Also doesn't take effect for about 10 years, so plenty of time to reverse once people find out🤷♂️...
23/
And because you're probably wondering, NO, it doesn't impact the salary deferral limit. That still gets indexed for inflation. So, over time, the salary deferral limit would catch up to the overall limit (but theoretically couldnt exceed it once there... long time away)
...
And because you're probably wondering, NO, it doesn't impact the salary deferral limit. That still gets indexed for inflation. So, over time, the salary deferral limit would catch up to the overall limit (but theoretically couldnt exceed it once there... long time away)
...
24/
There's also some relief for people who obtain their health coverage through a state-run exchange. Relief includes:
- Ability to qualify at higher income levels in 2021
- 'Auto-qualification' if you receive unemployment in 2021
- Relief for 2020 overpayment clawbacks
There's also some relief for people who obtain their health coverage through a state-run exchange. Relief includes:
- Ability to qualify at higher income levels in 2021
- 'Auto-qualification' if you receive unemployment in 2021
- Relief for 2020 overpayment clawbacks
25/
There are also some add'l opportunities for small biz to receive EIDL grants.
Thats about it for big fin plan-related provisions. Beyond that, lots of💰for a lots of things, from vaccines and schools, to libraries and museums.
Biggest Q now is the fate of min wage.
End👊
There are also some add'l opportunities for small biz to receive EIDL grants.
Thats about it for big fin plan-related provisions. Beyond that, lots of💰for a lots of things, from vaccines and schools, to libraries and museums.
Biggest Q now is the fate of min wage.
End👊
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