Individual Taxes

Tax Provisions for Individuals

1. Second stimulus payment
   1. $600 per taxpayer ($1,200 MFJ) – half of first stimulus payment amount
   2. $600 per qualifying child – up from first stimulus payment of $500 per child
   3. MAGI phase-out limits
      1. $75,000-$87,000 Single, MFS – upper limit $99,000 for first stimulus check
      2. $112,500-124,500 HOH – upper limit $146,500 for first stimulus check
      3. $150,000-174,000 MFJ – upper limit $198,000 for first stimulus check
   4. Stimulus payments NOT reduced for federal or state tax debts

2. Charitable contributions
   1. Nonitemizers – extends $300 above the line deduction to 2021 and increases MFJ above the line deduction to $600 in 2021 (still $300 for all taxpayers in 2020).
   2. Itemizers – extends increased limit on charitable deductions of 100% of AGI to 2021.
3. Medical expenses – makes permanent the 7.5% of AGI floor for medical deductions
4. Earned Income Credit (EITC) & Child Tax Credit (CTC) – allows taxpayers to use earned income from tax year 2019 to calculate EITC and refundable portion of CTC for tax year 2020.
5. Educator expenses – PPE and other supplies for COVID protection allowed for $250 deduction
6. Unemployment assistance –
   1. Provides $300 per week in federal benefits on top of state benefits thru March 14, 2021.
   2. Continues expanded coverage to self-employed and other non-traditional workers
   3. Continues additional weeks of federal benefits when state benefits run out
   4. Extra benefit of $100 per week for certain workers who have both wage and self-employment income
7. Employee portion of Payroll tax deferral – Extends repayment period through Dec 31, 2021
8. Health and Dependent Care Flexible Spending Arrangements –
   1. Can roll over unused amounts from 2020 to 2021 and from 2021 to 2022.
   2. Employees may make 2021 mid-year change in contribution amounts.
   3. Special carryover rules apply for children reaching age 14 during pandemic.
9. Transition from Tuition Deduction to Lifetime Learning Credit (permanent – effective in 2021) –
   1. Deduction for Qualified Tuition and Related expenses is repealed (2021)
   2. Lifetime Learning Credit AGI phaseout is increased to same level as American Opportunity Credit (2021).
10. Homeowner provisions
    1. Mortgage insurance premiums treated as qualified residence interest – extended through 2021.
    2. Gross income exclusion for discharge of indebtedness on a principal residence extended through 2025, but maximum exclusion is reduced to $750,000 (from $2 million).