![]() ![]() Full phaseout occurs at $80,000 for single, $120,000 for heads of households and $160,000 for married joint. The phaseout thresholds begin for taxpayers with adjusted gross income of $75,000 for single, $112,500 for heads of households and $150,000 for married joint returns. While the phaseout threshold begins at the same level as for the prior rounds of stimulus payments, full phaseout occurs at much lower levels of income. (As a comparison: The first two rounds of stimulus payments included lower amounts for children under age 17, had no payments for children age 17 or older, and had no payments for dependents who are not a child of the taxpayer). The amount of the stimulus payments will be $1,400 for each taxpayer ($2,800 for married couples) plus an additional $1,400 for each dependent of the taxpayer, including children age 17 or older. The payments represent an advanced payment of a credit for the 2021 tax year, so these payments do not affect the computations or reporting for 2020 income tax returns. ![]() The IRS is expected to begin sending these payments over the next few weeks. Third Round of Stimulus Payments: As discussed in our post on March 2, 2021, the Act provides for a new round of stimulus payments. Practitioners should also plan to amend returns for affected clients who already filed their 2020 income tax returns. Practitioners should put affected clients on extension until the IRS updates its systems to reflect this retroactive law change and until states announce whether or not they will conform with the federal treatment. (Correction: An earlier version of this post said that the exclusion threshold was up to $150,000 instead of less than $150,000.) This threshold is the same for all filing statuses, and, on a joint return, each spouse can exclude up to $10,200, to the extent that each spouse separately received unemployment benefits. Retroactive Exclusion of Certain Unemployment Benefits: As discussed in our post on March 9, 2021, the Act contains a provision that retroactively excludes up to $10,200 of unemployment benefits for the 2020 tax year for taxpayers with adjusted gross income of less than $150,000. The President is expected to sign it into law. On March 10, 2021, the House of Representatives passed the American Rescue Plan Act of 2021, which had previously been passed by the Senate on March 6, 2021. ![]()
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