After several days of negotiation, the Consolidated Appropriations Act, 2021 (the “CAA”) was passed by Congress on December 21, 2020 and signed by the president on December 27. The legislation includes numerous provisions intended to provide additional relief in response to the ongoing COVID-19 crisis. Many of the provisions contained within the CAA are either modifications or extensions of changes made by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020. Key individual and business tax provisions and their impacts are summarized below.
Direct Stimulus Payments
The CARES Act provided for direct stimulus payments to individual taxpayers whose incomes fell below certain thresholds, up to a maximum of $1,200 ($2,400 if married) with an additional $500 payment per child. Under the CAA, eligible individuals can receive an additional $600 ($1,200 if married) as well as a $600 payment per qualifying child. Individuals with income below $75,000 ($150,000 if married) are eligible to receive the full stimulus payment, with the amount being phased out completely at an income level of $87,000 ($174,000 if married).
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While most of the tax provisions of the Consolidated Appropriations Act, 2021 were simply modifications or expansions of existing provisions, they do provide potential tax savings opportunities for many individuals and businesses. Taxpayers should analyze the new provisions in consultation with their tax advisor to determine how to best take advantage of these relief measures, as many are set to expire by the end of 2021.
If you have questions regarding the changes discussed above and how they will affect your tax situation, please contact your Bennett Thrasher tax advisor by calling 770.396.2200.