There are several tax provisions in the latest Covid relief bill that was signed into law by President Biden today. Among those, a provision that makes the first $10,200 in unemployment benefits received in 2020 tax-free for taxpayers making less than $150,000 per year. This is a retroactive provision, so taxpayers who have already filed their 2020 personal return will need to file an amended return to take advantage of this provision.
Another round of economic impact payments will be sent to individuals who have adjusted gross income of $75,000 or less for singles and $150,000 or less for married filing jointly. This time, though, the phaseout is more compressed, so at incomes of $80,000 and $160,000, the payments will be $0. The payment will be $1,400 per individual, plus $1,400 for each dependent. A family of four will receive $5,600 provided their adjusted gross income is $150,000 or under.
The child and dependent care credit will be refundable, for 2021 only. The credit will be 50% of qualifying expenses, up to a limit based on income. The credit is increased to $4,000 for one qualifying individual, up from $3,000 under previous law, and $8,000 for two or more qualifying individuals, up from $6,000. The credit is reduced for incomes over $125,000.