What to expect from the American Rescue Plan stimulus bill

Posted at 11:27 PM, Mar 11, 2021
and last updated 2021-03-12 00:02:00-05

DETROIT (WXYZ) — "I've been having to pray," said Denise Hopkins, a single mother from Detroit. "It's been a challenge.”

Just before the pandemic, Hopkins was excited to begin her career, receiving a certificate to become a nurse aid assistant. But as a single mother with school closed, she’s been at home caring for her 7-year-old as he does school online.

“What keeps me grounded is looking at my son and his eyes and at my certificate, knowing that pretty soon things will get better,” Hopkins said.

With the signing of a $1.9 trillion stimulus bill, things immediately got better for Denise. As early as this weekend, she’ll get a direct payment of $2,800.

“I was very excited," Hopkins said. "I can take care of some bills that’s been lingering.”

Individuals making less than $75,000 a year or couples making less than $150,000 a year will get the full $1,400 per person payment, with reduced payments for those making up to $80,000 or $160,000 for couples.

“This is still a period of time to do what I call stacking cash,” said Robin Thompson, Founder of Budgetwise Consulting.

Thompson says once you take care of bills that need to be paid, focus on creating a rainy day fund.

"If you don't have at least 3 months of essential living expenses, that’s where you should park that money,” Thompson said.

The stimulus bill also impacts those who earned unemployment in 2020, making the first $10,200 in benefits not taxable.

"Especially in these times when people are just starting to get back to work, that extra bit of income can make all the difference,” said Stuart Sherman, Founder of Tax Resolve.

But some people faced with large surprise tax bills from unemployment have already filed, and some people who received unemployment benefits withheld those taxes from their checks.

Sherman says it’s still unclear what happens next for them.

“We’re in the middle of tax season right now. The IRS started accepting returns last month and people have already started filing, so its added a level of uncertainty to the process,” Sherman said. "The IRS is going to have to come up with some answers very shortly.”

Parents like Denise will also benefit from an increase in child tax credit for 2021, going from $2,000 to $3,000 per child. Credit for children up to age 5 will be increased to $3,600.

Starting in July, parents can also receive half of that tax credit in direct monthly payments.

Couples earning up to $150,000 per year, heads of household earning up to $112,500 per year, and individuals earning up to $75,000 annually will be eligible to claim their children for the full credit.

As for Hopkins, her son will soon be back in school soon. After that, she will be out on the job hunt. This extra benefit is the bridge that gets her there.

"I can create a savings account for me and my son so I can have something for when rainy days do come, we can have something to fall back on,” Hopkins said.