Federal Tax Deadline Extended
The IRS announced the tax filing deadline has been extended to May 17, 2021. The Colorado state tax filing deadline has also been extended to May 17, 2021.
Third Round Economic Impact “Stimulus” Payments
The third round of Economic Impact Payments, which are part of the American Rescue Plan, are currently being sent out.
Individuals earning up to $75,000 will receive $1,400 and married couples with incomes up to $150,000 that file taxes jointly will receive $2,800, plus $1,400 per dependent. College students and qualifying relatives who are claimed as dependents will also receive $1,400.
Those making more will receive a reduced amount, however individuals and couples making more than $80,000 or $160,000, respectively, will not receive the payment.
Track your payment with the IRS Get My Payment Tool
Earned Income Tax Credit
The American Rescue Plan also significantly expands the Earned Income Tax Credit for 2021 by making it available to people without children. The credit for low and moderate-income adults is now worth between $543 to $1,502, depending on income and filing status.
In addition, taxpayers are temporarily allowed to use either their 2019 income or 2020 income in figuring the credit amount.
Child Tax Credit
Under the American Rescue plan, the Child Tax Credit will be expanded to $3,000 for every child ages 6 to 17 and $3,600 for every child under the age of 6. The credit will also now be fully refundable and families will get the credit no matter how little they make in a year. Households making $75,000 for individuals and $150,000 for married couples would receive the full credit while those making above those thresholds will receive reduced amounts.
The plan is to send out the credit in periodic payments beginning July 2021. The US Treasury Department is still working on the details.
Child and Dependent Care Credit
Under the American Rescue plan, the dollar amount of this credit was increased and allows households to deduct costs associated with child and dependent care up to $8,000 for one child or dependent and up to $16,000 for two or more. The refundable portion increased from 35% up to 50% for tax year 2021.
If you received unemployment benefits in 2020, the first $10,200 received is exempt from federal income tax for households with incomes under $150,000. If married, each spouse can exclude up to $10,200. If you have already filed, the Internal Revenue Service announced that it will take steps to automatically refund money starting in May to people who filed their tax return reporting unemployment compensation before the changes made by the American Rescue Plan.
The increased unemployment benefits of $300 a week has been extended through September 6 – that is in addition to payments from state unemployment insurance programs.
Increased benefits are available for families during the COVID-19 pandemic. Eligible families can get connected to food resources by visiting the Hunger Free Colorado website to learn more.
Affordable Health Coverage through Connect for Health Colorado
Under the American Rescue Plan, workers that have been laid off can receive a full subsidy toward COBRA health insurance premiums at no cost from April 1 through the end of September 2021.
Connect for Health Colorado has also reopened the enrollment period through May 15, 2021.