American Rescue Plan 2021
On March 11, 2021 President Joe Biden signed the American Rescue Plan into law as part of his Build Back Better plan that includes the American Jobs Plan and American Families Plan. This was created in response to the COVID-19 pandemic, this American Rescue Plan is an emergency legislation package aimed at rescuing the United States and halting its spread. Due to the crisis, over 10 million Americans have lost their jobs and 4 million have been jobless for more than 6 months.
What is included in the American Rescue Plan?
As part of the American Rescue Plan, $1.9 trillion will be allocated toward small businesses, public healthcare, housing security, vaccination funding, and struggling U.S. communities. By fostering economic recovery and racial justice, Biden intends to create a more prosperous future. Child poverty is expected to be reduced by half if the American Rescue Plan policies are implemented.
Its main objective is to;
- Aid working-class families impacted by the pandemic by providing them with $1,400 per person checks, housing and nutrition assistance, extending unemployment insurance, and providing affordable daycare and healthcare access.
- Establishing a national vaccination program by setting up community vaccination sites across the country and making sure vaccine supplies are available. To contain the spread of COVID-19, sick leave will be increased, disparities in healthcare will be addressed, and most K-8 schools will be reopened safely. There is no vaccination program for Americans abroad, which raises questions about equality, especially considering the heavy tax burden expats face.
- Directly fund small businesses owned by entrepreneurs of color, especially those in troubled communities. In addition, protections will be provided for essential workers and first responders.
- Protect government data systems and provide emergency funding for upgrading IT infrastructure, as a national security measure.
Who is eligible for the American Rescue Plan?
Individuals with an AGI (Adjusted Gross Income) of less than $75,000 per year are eligible for the full $1,400 stimulus payments (known as ‘Economic Impact Payments’). A married couple with an AGI of less than $150,000 per year can receive $2,800 in assistance. As part of the second stimulus package, $600 in payments were made, for a total of $2,000 provided. Individuals and couples with AGI’s over these criteria will have their aid decreased until they reach $80,000 for individuals or $160,000 for couples.
The government is providing payments to families for every eligible dependent child that is claimed on their tax returns, and not just those under the age of 17.
Importantly, US citizens and Green Card holders living abroad are eligible for Stimulus payments. If they are not received automatically, the first two payments can be claimed as a refund on the 2020 federal tax return and the third payment can be claimed on the 2021 federal tax return. This has been welcome news for expats.
Even expats that haven’t been filing tax returns are eligible. Many have used the IRS Streamlined Tax Amnesty program to catch up on their US taxes, become fully US tax compliant and receive their Stimulus payments. For the far majority, the Stimulus money has been significantly more than the cost of using the IRS Streamlined Tax Amnesty program, so it’s been a win-win for thousands living abroad.
How is the money from the American Rescue Plan distributed?
Small businesses: More than a million small businesses will receive incentives worth $15 billion to assist them in reopening and rebuilding their businesses.
Abuse victims: For the victims of domestic violence and sexual assault, Biden is requesting $800 million in federal funding for programs to assist them. This situation has gotten worse because of the pandemic as some are trapped together with their abusers within their homes.
Veteran health care: President Biden is requesting an additional $20 billion for veteran care, ensuring that their health is not compromised by the crisis.
Mental health and substance abuse: Biden has also requested $4 billion in funding to strengthen and enhance mental health and substance abuse treatment.
TANF: President Biden is urging an additional $1 billion for states to fund increased financial assistance for Temporary Assistance to Needy Families beneficiaries (TANF).
What if I’m way behind on my U.S. tax returns?
There is a special IRS program to help you catch up on your U.S. taxes safely, without fines and penalties
It’s for American citizens that didn’t know they had to file U.S. tax returns each year, and have therefore fallen behind. Some more than 30 years! With the IRS Streamlined Procedure, say goodbye to overdue tax returns, late fees, and penalties. If you have children, we can backdate your Child Tax Credit Refund for 3 years.
Get a quote here.
Will the CARES Act be extended beyond 2021?
The unemployment provisions of the CARES Act have been extended until September 6, 2021 under the American Rescue Plan. Self-employed individuals are eligible to Pandemic Unemployment Assistance under the new CARES Act III (PA).
Among the tax laws made possible by the American Rescue Plan Act that will expire in 2021:
If you have more than one child between the ages of 6 and 17, then congratulations! The extra Child Tax Credit will provide $3,000 for each child in your household. However, if even just one member is under 6 years old, they are eligible to receive an additional tax credit amounting to $3,600 by 2021. This means that it can be claimed as a refund before taxes owed come due which makes this credit fully “refundable”. In his American Families Plan, Biden proposed that the child tax credit be extended to 2025.
Unfortunately, this extra Child Tax Credit is not available to Americans that have been living abroad for more than 6 months during 2021. The regular child tax credit refund still remains available to those living abroad. For each eligible child, the current refund is US$1,400 and can be claimed when filing a US tax return. For those living abroad, it’s important they file the right way. Filing Form 2555 and claiming the Foreign Earned Income Exclusion will immediately exclude the Child Tax Credit Refund.
Expats and Green Card holders need to know that there is usually other filing options and methods available to them, especially if they’re living in a high-income tax country such as Australia, New Zealand, the UK, most EU countries and Canada.
What effect does the American Rescue Plan have on the Earned Income Tax Credit?
For low-income individuals, the president has requested an extension of the Earned Income Tax Credit. As well as raising the income cap and expanding the beneficiary age bracket, Biden hopes to raise the credit limit for childless adults from around $530 to close to $1,500.
Is the American Rescue Plan going to keep people out of work?
Unemployment compensation extends from 24 to 53 weeks under the American Rescue Plan, while unemployment assistance extends from 50 to 73 weeks. It also improves unemployment insurance to aid workers in receiving benefits.
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