Stimulation Check Update: Here are 5 ways the new law can put money in your pocket. That’s more than $ 1,400.
Stimulation Check Update: Here are 5 ways the new law can put money in your pocket.  That’s more than $ 1,400.

Stimulation Check Update: Here are 5 ways the new law can put money in your pocket. That’s more than $ 1,400.

Now that President Joe Biden has signed $ 1.9 trillion stimulus package, families take a closer look at the many parts of sweeping legislation.

There are many provisions that will directly help families.

The benefit you are likely to see first is individual stimulus payments of $ 1,400, that could come already this weekend for individuals who have bank account information registered with the IRS.

Single people earning up to $ 75,000 are eligible, as are married people who file a joint tax return and earn up to $ 150,000. There is a partial benefit for singles earning up to $ 80,000 and married couples earning up to $ 160,000. Then you are not eligible.

The bill also provides $ 1,400 pr. next of kin, including children, college students and elderly relatives that you claim on your tax return.

Use our calculator to see how much you can get.

Here are 5 other ways that the stimulus plan can be put on more money in your pocket.

1. Tax deduction for parents

The new law increases the amount parents can get by extending it significantly Child tax deduction.

Parents with children ages 6 to 17 can receive up to $ 3,000 per child. child, plus $ 3,600 for children five and under, up from $ 2,000 per child. child with a cut off at the age of 16.

Parents will start receiving monthly payments from July to December, and the the rest of the credit may be required on the 2021 tax return.

The phases of the credit are complex.

It would start phasing out for singles earning up to $ 75,000 and married couples filing a joint return and earning up to $ 150,000.

Then the credit is reduced by $ 50 for each additional $ 1,000 in adjusted gross income until the credit reaches $ 2,000 per child, said Garrett Watson, a senior policy analyst at the Tax Foundation.

That would happen to singles earning up to $ 95,000 and married couples earning up to $ 170,000. When you reach this income level, you are entitled to $ 2,000 per year. child until you reach income levels of $ 200,000 for singles and $ 400,000 for couples. The credit is cut off for singles earning more than $ 240,000 and couples earning $ 440,000, he said.

The credit can also be refunded in full, which means you would get the full amount even if you do not owe tax.

2. Extended tax deductions to help with childcare expenses

The incentive bill significantly extends the child and care credit for one year.

The credit helps parents with children under the age of 13 to afford childcare.

The credit has been increased to a maximum of $ 4,000 for one child or $ 8,000 for two children, up from $ 1,050 and $ 2,100 respectively.

The phasing out of the credit is calculated on the basis of income level and a percentage of eligible expenses.

Those earning up to $ 125,000 can take the full credit, which is 50% of spending up to $ 4,000 and $ 8,000 caps. Those who earn more can take the credit, but the figure of 50% drops by 1% for every $ 2,000 in income over $ 125,000. Taxpayers earning more than $ 400,000 are not eligible.

3. Increases for dependent flexible consumption accounts

The stimulus package allows you to save more dependent care flexible spending accounts (FSA), if your employer signs up.

Parents can usually save $ 5,000 in an FSA, however stimulus bill more than double the amount $ 10,500. The change is only for 2021.

The accounts allow employees to save money, before tax, to pay for childcare costs for children under 13 or the cost of qualified dependent adults sharing the household. Saving the funds before tax can lower a family total taxable income.

The funds can be used for day care, summer camp and preschool education. They can also be used to pay for day care for adults.

Dependent care FSA accounts is “use it or lose it”, which means that if you do not spend the money in that tax year, they will normally be forfeited.

Many parents who were out of work or who worked from home due to the pandemic overpaid on their FSA accounts and risked losing the money, so employers were allowed by the IRS to transfer unused funds from 2020 contributions to 2021 and 2021 contributions to 2022.

But employers are not obliged to adopt the changes.

4. Help for health care

People who have lost their jobs have always been allowed to continue their employer health coverage through COBRA – Consolidated Omnibus Budget Reconciliation Act – but it is expensive.

Through COBRA, people usually pay the full cost of their plan.

But under the new stimulus law, the federal government will address COBRA from April 1 to September 30, 2021.

And for those who have purchased health insurance through a public exchange, the government will help with the premiums. Under the new law, your premium will not exceed 8.5% of your adjusted adjusted gross income.

If you are already signed up for a plan, you do not need to do anything to take advantage of the lower cost.

5. Unemployment benefits

The incentive bill gives the unemployed $ 300 extra a week until September 6th.

It also waives federal taxes on the first $ 10,200 in unemployment benefits for singles or $ 20,400 for married couples who both collected unemployment and filed joint tax returns. To be eligible for the tax deduction, households, whether single or married, must not earn more than $ 150,000.

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Karin Price Mueller can be reached at [email protected].

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