President Biden recently signed The American Rescue Plan Act of 2021 (American Rescue Plan) into law. It provides $1.9 trillion for direct payments to millions of Americans, extended unemployment benefits, relief for the restaurant industry and other businesses, as well as funds for state and local governments. There is also money designated to help open schools and improve the nation’s COVID-19 vaccination efforts. And, the American Rescue Plan includes measures to help families fight through these difficult times with increased tax credits, especially for childcare.

 

Here is a more detailed look at how it might impact you or someone you know.

The American Bankers Association has indicated that stimulus payments will start arriving in bank accounts of eligible recipients as soon as Wednesday, March 17, and will continue to arrive throughout March and April.

Payments will be made based on the most recent tax filing information that the IRS has on hand. If the IRS does not have the proper bank account information, a paper check or EIP Card will be mailed to the address on file.

The Plan will provide $1,400 per-person payments to households across America. Single individuals earning less than $75,000, heads of household with income below $112,500, and married families with a combined income of less than $150,000, will receive $1,400 per person, including dependents.

Taxpayers earning between $75,000 and $80,000 individually, $112,500 and $120,000 as head of household, or $150,000 and $160,000 as a couple will still receive a stimulus payment, but it will be reduced. The income cutoff for payments is $80,000 for individuals, $120,000 for heads of household and $160,000 for couples.

To check your eligibility, the status of your payment and how it will be sent to you, access the IRS portal at www.irs.gov/coronavirus/get-my-payment.

To see if your stimulus payment has arrived in your 1st Source Bank checking account, visit:
  • Mobile or Online Banking, or
  • InfoSource Phone Banking 574-235-2557.

If you lost your job because of the pandemic, you know how vital unemployment benefits have been, especially with the federal boost provided by previous relief bills. This new plan extends the payments through early September, including a federal boost of $300 per week. It also has a tax break built in for those who’ve received unemployment benefits. Federal income taxes have been waived on the first $10,200 of unemployment compensation received in 2020 for households earning less than $150,000. The IRS says many people often forget or don’t know that unemployment benefits are taxable. If you are receiving unemployment, you can choose to have the taxes taken out before you are paid, or you must set aside some of it to pay your taxes when you file your returns.

The American Rescue Plan includes temporary changes to tax credits that could save you a lot of money, especially if you have children. It allows children who are 17 years of age to be included in the Child Tax Credit calculation for the first time. It also increases the amount of the Child Tax Credit from $2000 per child to $3000 per child for children age 6 through 17 and from $2000 to $3600 per child for children under 6 for certain taxpayers.
The provision includes income cutoffs for higher-income households. Single taxpayers earning up to $75,000 and married couples earning up to $150,000 would receive the full credit of either $3000 or $3600 per child, but these payments would be reduced for people with earnings above those thresholds. Families who earn too much to qualify for the expanded child tax credits listed above could still claim the base $2000 credit for their children provided their incomes are below the current thresholds of $200,000 for single taxpayers and $400,000 for married couples.
There is also a change in the way parents can take advantage of this credit. The plan allows for advances to parents on half of their 2021 credit in monthly payments of about $300. Those payments would begin a little later this year, likely July. The rest of the credit for the year would have to be claimed as a credit on tax returns for 2021, the usual way of claiming a tax credit. These new rules for tax credits are currently in place for 2021 only although there are efforts underway to make them permanent.

The American Rescue Plan designates billions of dollars to help get people vaccinated. The United States has distributed well over 100 million vaccine doses across the country, and it has administered more than 90 million vaccinations. $8.75 billion has been appropriated for federal, state, local, and tribal agencies so they can hire the people needed to get shots into the arms of more people. Some of the funds have also been dedicated to making sure underserved communities have access to vaccinations.
There is also funding for more vaccine development, including research and manufacturing. Testing and contact tracing have also been prioritized as well as funds to help reimburse hospitals for some of the money they’ve lost during the pandemic.

Some of you have children back in their schools, others may not. The American Rescue Plan has dedicated $130 billion to help K-12 schools do what is needed to make sure kids and teachers are safe in the classroom. The money will be used to improve ventilation, reduce class sizes if necessary, hire more staff to help with cleaning, and make sure social distancing measures are in place.

Congress recently approved an extension to May 31, 2021, for businesses to apply for the Paycheck Protection Program, providing an additional two months. The PPP Extension Act of 2021 also provides the Small Business Administration (SBA) an additional 30 days for processing applications after the application submission deadline of May 31 expires. While businesses now have more time to apply, the SBA says that at the current rate of lending the funds appropriated to PPP by Congress might only last until mid-April. We encourage all interested businesses to contact us as soon as possible.
Nationwide, more than $660 billion in forgivable loans has been distributed to small businesses through the program. 1st Source has provided PPP loans to more than 3500 businesses, totaling more than $590 million in funding. Small business owners are encouraged to reach out to 1st Source for assistance, especially sole proprietors and those who file a schedule C. New rules for PPP do open the door for more nonprofits to be eligible for the loans. 1st Source is once again urging nonprofits to contact the bank soon to inquire about eligibility and the application process.
The funding is currently available until May 31, 2021, or until it runs out, whichever is sooner. Please apply no later than May 24, 2021. More information about the Paycheck Protection Program can be found here.

Part of the American Rescue Plan is the Restaurant Revitalization Fund (Fund). It’s $28.6 billion specifically targeted for businesses in the food services industry. It allows those businesses to apply for grants that will cover their pandemic-related losses. There is a limit of $10 million per eligible entity, and $5 million per physical location of the eligible entity. According to language in the Fund, the amounts of the grants would be calculated by subtracting 2020 revenue from 2019 revenue. The Small Business Association will oversee most of the money in this program.

 

The American Rescue Plan Act of 2021 contains 630 pages of information, detailing how $1.9 trillion will be spent to help this great country recover from the pandemic and the losses it caused. We have provided you with basic information about some of the areas we think will impact the most people, but there is certainly much more information available. If you want to learn more about the American Rescue Plan, you can read it at Congress.gov | Library of Congress.