American Rescue Plan Act (ARPA) of 2021
Several ARPA provisions affect the 2020 tax return people are filing in 2021, including exempting up to $10,200 in unemployment compensation from tax and another benefiting people who purchased subsidized health coverage through federal or state Health Insurance Marketplaces. The law also includes the third round of Economic Impact Payments, now going out to eligible Americans, that are generally equal to $1,400 per person for most people and advance payments of the Child Tax Credit, paid monthly from July to December 2021. Keep up with tax law developments by regularly checking IRS.gov.
2020 Unemployment Compensation
The Internal Revenue Service is issuing refunds throughout the summer to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan later excluded from taxable income.