Gress Income Tax Service

American Resucue Plan Act

American Resucue Plan Act (3/11/2021

Individual tax provisions

  • A $10,200 per individual unemployment insurance exclusion for the 2020 taxable year, only for households with modified AGI of $150,000 or less. Taxpayers who have already filed returns reporting 100% of their unemployment will need to supersede or amend their returns to get a refund;
  • The IRS is still releasing details on special situations and we are waiting on further details for married with income over $150,000
  • If you already filed your tax return, as of right now do not file an amended yet.  The IRS is working to fix it retroactively for those who qualify.
  • A third round of Economic Impact Payments of $1,400 per individual and dependent (including dependents over age 17);
  • Check your Stimulus payment here:   www.irs.gov/coronavirus/get-my-payment
  • Extension of Pandemic Unemployment Assistance until September 6 with the $300 boost;
  • Increased and fully refundable Child Tax Credits and Dependent Care Assistance Credits for the 2021 taxable year;
  • An increased employer-provided dependent care assistance exclusion;
  • A five-year COD exclusion for student loan forgiveness;
  • An expansion and increase of the Earned Income Tax Credit;
  • Tax relief for excess advanced Premium Tax Credits received in 2020, and an increase in the Premium Tax Credit for 2021 and 2022; and
  • Six months of free COBRA benefits.

Business tax provisions

  • Extension and expansion of the Employee Retention Credit;
  • Extension and expansion of the employer credits for paid sick and family leave benefits;
  • Credits for providing subsidized COBRA benefits; and
  • Restaurant revitalization grants to cover restaurant business losses.

To access the full text of the bill, go to:

www.congress.gov/bill/117th-congress/house-bill/1319/text

The full text of the CARES Act is available at:

http://www.congress.gov/bill/116th-congress/house-bill/748/text

How to get money fast for paid leave and employee retention credits (04-01-20)

The IRS has provided two different procedures to get money into employers' hands quickly who are claiming credits for paid sick or family leave benefits or employee retention credits. Employers may claim credits against their 6.2% OASDI taxes for:

  • 100% of their employer-paid sick leave and employer-paid family leave benefits paid under the Families First Coronavirus Response Act (FFCRA) to qualified employees for leave taken after March 31, 2020, through December 31, 2020; and
  • The new Employer Retention Credit of 50% of qualified wages paid to employees, up to a $5,000 maximum credit for wages paid after March 12, 2020, and before December 31, 2020.
  • https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Rather than wait weeks after the employer has filed its quarterly Form 941, the IRS has set up two alternative ways employers can cash in these credits quickly:

  • They can retain the following employment taxes rather than depositing them:
    • Federal income taxes withheld for all employees;
    • The employee's share of Social Security and Medicare taxes (but only for the employee who received the paid benefits or qualified wages); and
    • The employer's share of Social Security and Medicare taxes for all employees; or
  • Alternatively, employers may file Form 7200, Advance Payment of Employer Credits Due to COVID-19, to expedite a refund of the credit due in excess of the amount of previously retained employment taxes. The IRS has stated that they will try to issue refunds within two weeks.

Form 7200 may be filed for an advance payment of the credits anticipated for a quarter at any time before the end of the month following the quarter in which the employer paid the qualified wages. If necessary, it can be filed several times during each quarter.

Submit Form 7200 by faxing it to (855) 248-0552.

Form 7200 is available at:

www.irs.gov/forms-pubs/about-form-7200