The Senate today passed its version of the COVID "Rescue" bill. Changes made by the Senate will require either the House of Representatives to vote to ratify the Senate changes, or a conference committee to between the chambers to settle on a final bill. Jad Chamseddine of Tax Notes reports that "House Majority Leader Steny Hoyer, D-Md., said in a March 6 statement that the House will bring the bill to the floor on March 9."
The Senate bill includes a provision changing the tax rules for last year by exempting the first $10,200 of 2020 unemployment compensation from taxation. Whether this late change in 2020 rules will convince the IRS to delay the April 15 filing deadline is unknown; the IRS has so far insisted the deadline will not be moved this year.
The Senate bill has two other significant tax changes. One reduces the phase-out range for additional $1,400 tax rebates. The single-filer phaseout range will be from $75,000 to $80,000, while joint filers will phase out between $150,000 and $160,000 of AGI. Taxpayers with 2020 income in or above these phase-out ranges, but whose 2019 income was below them, should consider delaying their 2020 filings to preserve eligibility for the payments, as the legislation uses 2019 income to determine eligibility if the 2020 return has not been filed.
The other change increases the number of public company employees for which deductions for compensation over $1 million will be disallowed.
Senate Passes COVID Bill With Exemption for Unemployment Income - Jad Chamseddine, Tax Notes.
Senate Democrats Pass $1.9 Trillion Covid-19 Relief Plan - Kristina Peterson, Andrew Duehren, and Richard Rubin, Wall Street Journal ($).