What is the American Rescue Plan?
COVID-19 affected both the financial and physical health and well-being of many people. The U.S. government created a multi-faceted plan intended to help those who’ve suffered. It’s called the American Rescue Plan. It was signed into law about a year ago on March 11, 2021. While you may have heard about it, or even benefitted from it, there are some updates to consider.
Recent 2022 plan updates
Federal student loan payments are paused until May 1, 2022. The 2021 bill also extended the federal Earned Income Tax Credit (EITC). Those who qualified should have received either Letters 6419 and 6475 from the IRS.
- Letter 6419 is for parents who received monthly Child Tax Credit (CTC) payments in 2021.
- Letter 6475 includes the amount of your third stimulus payment in 2021.
This year, 2022, the Federal Earned Income Tax Credit increases significantly and includes workers without kids. Those were previously not eligible may now qualify: those over 65 and those who are between 19 and 25 years old.
What the new Child Tax Credit (CTC) looks like
When you file this year (2022) the CTC will be expanded. You would have received $2,000 in 2020. In 2021 families received $3,600 for each child under 6 and $3,000 for each child between 6 and 17 years old. Even if you do not owe taxes you are eligible for this “credit” which is a full refund.
No tax on discharged student loan debt
The plan allows students who have “forgiven loan debt” from public lenders to exclude that discharged debt from their taxable income. This is in effect for tax years 2021 through 2025. Federal loan payments, interest, and collections are suspended without fee for college students through May 1, 2022.
Free tax prep if you qualify
The IRS offers Volunteer Income Tax Assistance (VITA). This program, in conjunction with Tax Counseling for the Elderly (TCE), provides free filing for people who earn $58,000 or less per year, are disabled, or have limited English speaking ability. Sometimes the IRS is remarkably helpful.