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