The American Rescue Plan has passed, now what?
Let’s talk about everything you need to know about the changes of this tax season.
Economic Impact 3 - Also known as the third stimulus or EIP3
The official release date for stimulus payments is March 17, 2021
Many taxpayers have and will receive their stimulus payments prior to the official date, however many will receive these payments automatically over the upcoming weeks. Contacting financial institutions, tax offices, or the IRS will not speed up processing times.
Social Security recipients should expect to receive the third payment the same way they would receive any other payment. An official date has not been given for these recipients as of yet.
For those who received the first and second stimulus payments but didn’t receive a payment via direct deposit, they will generally receive a check or, in some instances, a prepaid debit card (referred to as an "EIP Card). A payment will not be added to an existing EIP card mailed for the first or second round of stimulus payments.
$1400 for taxpayers and all qualifying dependents including those over 18
The prior stimulus payments were for children under 17 years of age. This one will include older qualifying dependents.
EIP3 cannot be offset for various Federal debts
Many taxpayers had their original stimulus payments applied to past due debts. The EIP3 will not go to past due tax debts and various other federal debts.
They are using 2019 tax return information if the 2020 isn’t available.
If you have filed your 2020 tax return, the IRS will use this information as it is likely most accurate.
What happens if you’ve already filed your taxes. How will you receive your stimulus payment?
Based on the communication we’ve received thus far, if you filed your taxes and gave direct deposit information, you should receive your stimulus payment in your account. If you signed up for your refund to be mailed out, the stimulus payment will also be mailed out.
If you opted to have your filing fee deducted from your refund, therefore including a third party bank, we have received communication that the IRS is set to deliver the payments to the taxpayers' actual accounts referred to as the Ultimate Bank Account. Our partnering bank, MetaBank, has announced that if they receive EIP3 payments for taxpayers by mistake, they plan to process those payments as a means to spend up delivery times for clients.
Unemployment Compensation & Marketplace Penalty Changes
For tax filers with a modified adjusted gross income less than $150,000, the first $10,200 of unemployment compensation has been deemed non-taxable. This decision has been made on a federal level. Oklahoma hasn’t made an announcement at the time of this notice of what their plans are.
Marketplace Penalties Waived
The penalty that comes from advance premium tax credit has been addressed with the American Rescue Plan Act. The IRS hasn’t issued official guidance on how these changes will be enacted at the time of this notice.
What if I already filed my tax return and had unemployment income or was penalized for my Marketplace health insurance? Can this be adjusted?
Yes, this can be fixed. You will need to file an amendment for your tax return. The IRS has urged taxpayers to wait for official guidance on how this change will be carried out.
Additional Child Tax Credit (CTC)
Increased Child Tax Credit
The Child Tax Credit has been increased to $3000 per qualifying child for dependents over 6 years of age. The CTC has increased to $3600 children under 6 years of age.
Families could receive monthly payments
Should a qualifying family chose to receive an advance of the CTC, they would receive $250 per month for children over 6 years of age and $300 for children under 6 years of age. This option starts in July 2021 as an advance of the 2021 tax credit.
This credit is fully refundable and has no minimum earnings
Unlike the current restrictions of the CTC, this change makes the credit fully refundable and removes the earning minimum currently in place.
The IRS has NOT issued an official notice regarding the new Child Tax Credit and this section will be updated as soon as the information is released. This change does not impact the 2020 tax return.
Please be mindful that the above mentioned changes happened at a federal level and the State of Oklahoma hasn't made any announcements as to their plans regarding these shifts. Also, the federal and state tax deadlines for Oklahoma residents has been pushed back to Tuesday, June 15, 2021 due to the snow storms we recently experienced.