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ARPA Tax Related Items

Posted by taxguru on March 16, 2021

Continuing a long tradition of assigning names to legislation that mean exactly the opposite of what they actually are (Affordable Care Act, etc.), our rulers in DC have just enacted a spending monstrosity they tagged as the American Rescue Plan Act of 2021.  As it was working its way through Congress, I could swear that I saw references to it being 600 plus pages.  However, this official PDF copy of the law that I just downloaded is only 242 pages.

Even that is too much text to have to wade through, especially during this busiest time of the year; so I rely on summaries that are produced by the tax reference services.

As I have mentioned on several occasions, my number one go-to for tax answers is TheTaxBook.  Once again, they did an excellent job of distilling the tax related items in those 242 pages, and have released a 25 page analysis, as well as a much more concise three page summary.  They also created this two-page client handout version of the summary.

The effective dates of the new tax items are varied.  Some are just for 2020, some are just for 2021, and others are for several years.  As we know all too well, any or all of these changes can be changed again at the whim of our out of control rulers in DC.

Luckily, I didn’t notice any changes that affect 2019 tax returns, so there won’t be any need to amend those years.  However, people who filed their 2020 returns early may need to amend if they qualify for either of the two very generous new tax breaks that only apply to 2020:

Up to $10,200 of tax free unemployment benefits

Waiver of the requirement to repay any excess Premium Tax Credits that were received during 2020 as reductions in the cost of health insurance.

As I like to do, I will be posting other useful analyses and summaries of this new law, as I come across them.

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