Tax Cuts in the American Rescue Plan Act
Unemployment Benefits-The act makes the first $10,200 in unemployment benefits tax free in 2020 for taxpayers making less than $150,000 per year.
Third Stimulus Check-The act creates a new Sec 6428B that provide individuals with a $1,400 stimulus payment plus $1,400 for each dependent, including college students and qualifying relatives who are claimed as dependents.
Child Tax Credit-The Act increase the amount of the credit to $3,000 per child ($3,600 for children under 6). The IRS is directed to pay monthly in advance. Payment will run from July Through December 2021.
Child and Dependent Care Credit-The act makes various changes to the Sec 21 child and dependent care credit, effective for 2021 only, including making it refundable. The credit will be worth 50% of eligible expenses, up to the a limit based on income, making the credit worth up to $4,000 for one qualifying individual and up to $8,000 for two or more.