{"id":672,"date":"2021-04-08T13:02:40","date_gmt":"2021-04-08T19:02:40","guid":{"rendered":"http:\/\/gpswp.com\/ursadvisory\/?p=672"},"modified":"2021-04-08T13:11:21","modified_gmt":"2021-04-08T19:11:21","slug":"how-the-american-rescue-plan-could-affect-high-net-worth-americans","status":"publish","type":"post","link":"https:\/\/gpswp.com\/ursadvisory\/how-the-american-rescue-plan-could-affect-high-net-worth-americans\/","title":{"rendered":"How the American Rescue Plan Could Affect High-Net-Worth Americans"},"content":{"rendered":"\n

As one of his first major moves in office, President Biden signed into law<\/a> the third stimulus package of the COVID-19 pandemic era, dubbed the American Rescue Plan<\/a> (ARP). This $1.9 trillion stimulus plan is meant to extend, renew, and enact relief for those affected by the virus. While many parts of the plan are aimed at low-income households, there are a few ways high earners can still benefit. Below is a breakdown of this new legislation as well as insight on how the major components could affect you. \u00a0<\/p>\n\n\n\n

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1. Stimulus Checks<\/h3>\n\n\n\n

Unfortunately, individuals earning over $80K and married couples earning over $200K are not eligible to receive any stimulus from the American Rescue Plan; individuals earning between $75K and $80K (and married couples earning between $150K and $200K) will receive a reduced amount, and those earning under $75K and $150K respectively will receive the full $1,400 amount.[i]<\/a> The stimulus also provides $1,400 per dependent child for eligible parents.<\/p>\n\n\n\n

Keep in mind, this third stimulus will be based on 2020 earnings rather than 2019, if you have already filed them with the IRS. So, if your situation has changed since the first two waves of stimulus and you fall under the income cap for the 2020 year, you may be receiving assistance in the near future (if you haven\u2019t already).[ii]<\/a><\/p>\n\n\n\n

2. Small Business and the PPP<\/h3>\n\n\n\n

Overall, this bill allocates $50 billion toward assisting small businesses affected by COVID-19.[iii]<\/a> The Paycheck Protection Program (PPP) that has allowed so many businesses to stay afloat through this difficult time will receive an additional $7.25 billion to be used up until the March 21, 2021 deadline.<\/p>\n\n\n\n

Additionally, the Employee Retention Credit (ERC) will be extended through the end of 2021. This refundable tax credit allows business owners to claim up to $7,000 per employee per quarter as an incentive to keep these employees\u2026well, employed![iv]<\/a><\/p>\n\n\n\n

3. Unemployment Payments<\/h3>\n\n\n\n

Even as a high-net-worth individual, you may have been one of millions of Americans laid off or furloughed during the pandemic. And if you filed for unemployment during that period, you may now be wondering how to handle this type of income on your taxes.<\/p>\n\n\n\n

Typically, individuals who file for unemployment would have to pay income tax on their benefit, but the ARP provides a tax break on the first $10,200 in unemployment benefits received. Any amount received above $10, 200 will be taxed as ordinary income.[v]<\/a><\/p>\n\n\n\n

If you filed your 2020 taxes before the stimulus plan was signed into law, talk with your tax professional about amending your return to take advantage of this change. If you are still collecting unemployment, you\u2019ll be eligible for an extra $300\/ week through early September as provided in the ARP.[vi]<\/a><\/p>\n\n\n\n

4. Tax Credits for Parents<\/h3>\n\n\n\n

In addition to the $1,400 stimulus provided for each dependent child, the American Rescue Plan also offers parents two other forms of relief: (1) an additional child tax credit and (2) a bump in tax credits for childcare expenses.[vii]<\/a><\/p>\n\n\n\n

Child Tax Credit<\/h4>\n\n\n\n

Previously, the child tax credit offered eligible families a $2,000 tax credit per child under the age of 17. With changes made under the new legislation, though, this credit is temporarily expanding.<\/p>\n\n\n\n

Families will receive up to $3,600 per child under age 5 and $3,000 for children ages 6-17. Not only does this increase the child tax credit, but it extends it to include children age 17. Of course, eligible children must be both (1) related to you and (2) reside with you for at least six months out of the year.<\/p>\n\n\n\n

In addition to the higher credit amount, the ARP provides that:<\/p>\n\n\n\n