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FAQ on the American Rescue Plan

On Wednesday,  March 10, the House voted to pass the latest stimulus package and, the following day, President Biden signed it into law. We’ve included some frequently asked questions and answers about the American Rescue Plan below as well as a telephone town hall recording that Rep. Bass hosted with local experts the night the bill was signed into law.

What’s happening with the child tax credit?

Here’s how it works:

This is a fully refundable tax credit. That means that even if you do not owe any tax you can still get the money.  It doesn’t require an individual to be employed to qualify.  You must, however, file a tax return to claim the credit. 

What are the income limits for claiming the child tax credit?

If you earn less than $75,000 (or your household earns less than $150,000) you will receive $3,600 for each child under age 6 and $3,000 for each child aged 7-17. (It used to be $2,000 per child and ended at age 16.) If your income exceeds those thresholds, the credit will be reduced by $50 for every additional $1,000 of income. Individuals earning $95,000 or joint filers earning $170,000 are still eligible for the pre-existing $2,000 child tax credit (up to $200,000 and $400,000 respectively) but are not eligible for the additional $1,600 expanded tax credit.

I heard you get some of the child credit money this year.

The tax credit applies to your 2021 tax year, but the IRS will advance part of the credit in the form of checks that will be delivered or direct-deposited as early as July. You will only receive the advance payments if you are already in the IRS system (i.e., you have filed taxes in the past 3 years.)  These checks will continue at semi-regular intervals through December. The remaining amount will be credited to you when you file your taxes next year.

Which children qualify for the expanded child tax credit?

The child must be a U.S. citizen, national or resident alien and have a Social Security number. You also must claim him or her as a dependent on your 2021 tax return, and the child must be related to you and generally live with you for at least six months during the year. You must put the child's name, date of birth and SSN on the return.

Am I eligible for the child tax credit if I’m having a baby this year?

Yes, but the IRS won’t know about the baby until you file your taxes, so you will not receive the advance payments.  You will have to claim it when you file your taxes in 2022.

How much are the stimulus checks and who will get them? When will they arrive?

You can use the calculator to get a good sense of how much you will receive, here.

Under the bill, single filers with incomes up to $75,000, head of household filers with incomes up to $112,500, and joint filers with incomes up to $150,000 will receive payments of $1,400.  Those making more than the income thresholds will receive lesser amounts, and those single filers making more than $80,000 (head of household filers making $120,000, and joint filers making $160,000) will receive no stimulus payment at all.

How will I receive the stimulus money?

If you have direct deposit set up with the IRS, you may have already received the money in your bank account.  If not, you should receive the funds very shortly. If you receive your tax refunds via check or pre-paid debit card, those should arrive in the mail over the next few weeks.

Are adult dependents eligible for stimulus checks?

Unlike previous payments, adult dependents (those who are 19-24, retirees, or adults with disabilities who rely on another person for more than half of their expenses) are now eligible for payments, as long as the filer who claims them as a dependent meets the eligibility requirements listed above. 

The check will be sent directly to the filer who claims the dependent, not the dependent.

Previously, only dependents under 17 were eligible.

Are mixed-status or undocumented families eligible for a stimulus check?

In cases of mixed-status families where only one spouse has a Social Security number, the family would get a payment of $1,400 for the spouse with a number, plus $1,400 for each dependent who also has a Social Security number.

If both parents are undocumented but their dependent is a U.S. citizen, then that dependent does qualify for a check - as long as their parents filed their taxes with individual tax identification numbers (ITINs).

Will I get the $1400 stimulus payment for a child born in 2021?

Yes. The American Rescue Plan includes a provision that allows any person who gives birth in 2021 to receive the third $1,400 stimulus check for that child after filing their tax return in 2022.

What tax return year is the government using to determine eligibility for a stimulus check?

Under the bill, the IRS is directed to make payments initially based on people's 2019 tax returns or their 2020 returns if they've already been filed.

What if I never received my first or second stimulus check?

If you were eligible to receive the first or second stimulus check and didn’t receive it, you must claim the Recovery Rebate Credit when you file your 2020 taxes. This form is for paper filers. E-filers should have the option in whatever software they used to file.

Are stimulus checks tax-free?

Yes, stimulus checks are not considered taxable income; therefore, they will not be taxed.  They are also not subject to being withheld to pay an outstanding debt to the IRS.  And receiving these payments will not affect your eligibility for any federal government assistance or benefit program.

Will unemployment assistance be extended? Do I have to pay taxes on my unemployment benefits?

The current $300/ week federal benefit will be extended through early September. The first $10,200 of unemployment benefits received in 2020 have also now been designated tax-free for households making less than $150,000.

What support does this bill provide to small businesses?

The bill funds $15 billion in Economic Injury Disaster Loans (EIDL) grants, expands Paycheck Protection Program (PPP) eligibility and dedicates an additional $7.25 billion in funding and additional resources to help small and disadvantaged businesses navigate and access COVID relief programs. More information is available here.

The bill also specifically increased the funding allocation for a new program at the SBA to offer assistance to restaurants and bars hardest hit by the pandemic from $25 billion to $28.66 billion. $5 billion is set aside specifically for smaller establishments with less than $500,000 in 2019 annual revenue. During the first 21 days, applications from restaurants owned and operated by women, veterans, or socially and economically disadvantaged individuals will receive priority.  Those businesses can still apply for assistance even after the initial preference period, through March 31, 2021 when the program will stop accepting all applications. 

When do I have to start repaying my student loans?

For student loans through the U.S. Department of Education (not private loans), student loan interest, loan payments and collection actions were suspended by the Department of Education on March 20, 2020.  Those suspensions were extended by the CARES Act and subsequent legislation through September 30, 2021.  On October 1, student loan interest will again begin to accrue, and regular payments will be due on your regular payment date unless you make other arrangements with the Department of Education.  Both Federal Student Aid and your loan servicer should contact you ahead of time to remind you that you will need to start making payments again, but the payments will be due whether or not they actually contact you.  Be sure your contact information is up to date at StudentAid.gov/login.

I’m worried that I won’t be able to afford my new student loan payment.  How can I prepare or get help?

The Department of Education offers a Loan Simulator which can help you to find a repayment plan that meets your needs and goals, or to decide whether to consolidate. Loan Simulator can help you estimate payments under a variety of repayment plans, including income-driven repayment (IDR) plans. An IDR plan can make your payments more affordable, depending on your income and family size. Loan Simulator also shows you the impact of deferment or forbearance on your overall loan balance.

How will this bill help schools reopen?

The American Rescue Plan makes nearly $130 billion immediately available to State Education Departments so they can:

  1. Get schools open safely
  2. Keep schools open safely
  3. Make up for lost learning time.

Superintendents, schools boards, the PTA, and others told Congress they need the American Rescue Act and we are listening to them.

The American Rescue Plan also provides resources for higher education, Head Start and childcare facilities.