$10,200 in tax free unemployment, $3,600 or more for parents: New tax breaks you should know

Due to the #coronavirus pandemic, many Americans have ended 2020 with less money to spare on taxes this year. Thankfully, tax changes through the third stimulus package ensure that those who have struggled with unemployment and families with children.

Which new tax breaks are available?

Tax free unemployment up to $10,200

Those who collected unemployment for the first time in 2020 could have gotten a tax-time surprise when filing their unemployment earnings this year. Due to the tax on unemployment earnings being a huge strain on already financially burdened taxpayers during the pandemic, changes have been made to lessen the amount that the unemployed have to pay on their earnings.

The tax break makes unemployment earnings tax-free up to $10,200, which could reduce the amount of tax owed for many unemployed tax filers this year.

$3,600 per child for families

For families, the pandemic has meant more expenses on childcare as many families struggle to provide extra resources and food for their homebound children. The new Child Tax Credit provides an essential refund to families based on the amount of children they have provided for in 2020.

For families who plan to collect this benefit, they should be aware of these Child Tax Credit rules and regulations:

• Married couples with children making under $400k in adjusted gross income (AGI) will qualify.
• Individuals with children making under $200k in adjusted gross income (AGI) will qualify.
• Families will receive $3,600 per child under 6 and $3,000 per child older than 6.
• Families will receive $500 for per child age 17 to 24 in high school or full-time college.
• There is no limit on the number of children who can be claimed.

When families will receive their money

Families collecting this benefit on their 2020 taxes should be aware that any money disbursed through this credit will come in two waves. Initially, half of the money will be disbursed right away with the rest of a tax filer’s return. Beginning in June 2021, the other half will be disbursed in monthly installments until December 2021.

What if I already filed my 2020 taxes?

If you already filed income taxes for 2020, you can still file an amended tax return to receive these benefits during this tax season. An amended tax return can be filed directly with the IRS

Are these incentives enough? What pandemic tax breaks would you like to see?