On April 28, 2021, President Biden announced the American Families Plan (the “Plan”), a $1.8 trillion package that is designed to ensure a more stable economic recovery from the COVID-19 pandemic. The Plan would expand education, childcare, and paid leave.
To pay for the Plan, President Biden proposes to pay for these enhancements by increasing taxes for the very wealthy, promising a return of $1.5 trillion over ten years. Indeed, the Plan’s tax changes include eliminating tax loopholes that President Biden states “reward wealth overwork.” The Plan also has strict enforcement measures to collect more of what the wealthy taxpayer actually owes on their business and capital income.
The intended result is a tax code with fewer advantages for the rich and more benefits for low and middle-income Americans, as a way in which to equalize the tax burden overall tax brackets.
The American Families Plan is a long way from becoming law, and many Republicans expressed dissatisfaction with it almost as soon as it was unveiled. Therefore, taxpayers will have to wait and see what transpires over the next year with regard to the Plan. That said, it is still advisable to consult a Sarasota tax attorney to discuss how these changes might impact you.
In this article, we are going to discuss several aspects of the American Families Plan, including (i) tax cuts to help taxpayers with children, (ii) health insurance premium credits, and (iii) changes to the earned income tax credit.
If, after reading this article, you would like to learn more about what is proposed in the American Families Plan, we invite you to call the Sarasota tax attorney, Mary E. King, P.L. The Law Office of Mary E. King, P.L. can make sure that your tax planning in Sarasota is resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
1. The Plan’s Proposed Tax Cuts Relating to Children
Some of the Plan’s most ambitious tax cuts would impact taxpayers with children. The American Rescue Plan Act (ARPA) became law in March of 2021 and increased the child tax credit from $2,000 to $3,000 per child for children aged six and older, and $3,600 for a child under age six.
In addition, 17-year-olds became eligible for the credit, and under ARPA, the credit is fully refundable on your taxes. The Plan would make this full refundability of the child tax credit permanent and extend the other child tax credit expansions through 2025.
The Plan would also make ARPA’s expanded childcare credit permanent. Doing so would allow families to receive a tax credit of up to one-half of their childcare costs for children under age 13, to a maximum of $4,000 per child or $8,000 for two or more children.
2. Permanent Credits for Health Insurance Premiums
ARPA provided for two years of reduced health insurance premiums. The reduction was made possible through an expanded premium tax credit for individuals who buy their own health insurance. The Plan would make those credits permanent.
3. The Earned Income Tax Credit
APRA tripled the earned income tax credit (EITC) for childless workers for the tax year 2020. The EITC is a refundable tax credit that enables workers to get money back even if they owe no taxes or the amount of the credit exceeds any tax owed.
Under the Taxpayer Certainty and Disaster Relief Act of 2020, a taxpayer can elect to use their 2019 earned income to determine the 2020 EITC if 2019 earned income is more than 2020 earned income. Like with health insurance credits, the American Families Plan would make this tax credit permanent.
The EITC can benefit many families by providing up to a $6,600 tax credit. However, the EITC is complicated and varies by family size, income, and filing status. A Sarasota tax attorney can determine your eligibility.
Get More Guidance on the American Families Plan Proposals from a Sarasota Tax Attorney
The Biden Administration has ushered in many new tax proposals that could soon become law. Make sure that you take advantage of all of these possible tax changes by consulting with an experienced Sarasota tax attorney.
Consider reaching out to the Law Offices of Mary E. King to help. Tax matters can be complicated, and thus, it is always helpful to have someone in your corner who understands the tax law and deals with the IRS on a regular basis. Indeed, beyond just the stimulus payment from the IRS, there could be other issues with which a seasoned tax attorney can help.
So, when it comes to dealing with tax relief and tax litigation, you need to talk to a Sarasota tax law attorney who can help. Mary E. King has spent her career concentrating in tax law and can help you with tax scams in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.
That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax lawyer of Florida, is the first step you should take towards relief.
The Law Office of Mary King P.L. offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax lawyer in Sarasota for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585. Remember, at the Law Office of Mary E. King, we are focused on solving your tax issues for good.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.