Lost Jobs in 2020 Qualify for Important Tax Credits
According to USA Today, many lower wage workers who are raising families bank on receiving a healthy tax refund when they claim the Earned Income Tax Credit on their income tax returns.
Many people who are unemployed are wondering what happens if you ended up being out of work much of 2020 during the pandemic? Does that mean you are shut out of the earned income credit?
Millions of struggling families would have faced just that sort of financial nightmare this spring if not for an 11th hour action by Congress late in December.
The latest COVID-19 economic relief package created a special break for obtaining the earned income tax credit after the economic upheaval in 2020.
But the deal isn't automatic. Tax filers and the people who help them with their taxes now must be aware of the new option and take time to review 2019 earnings, as well as earnings in 2020, to calculate the credit. And they cannot simply assume that they won't qualify for earned income tax credit. (USA Today)
One of the new things for 2020 tax returns is that tax filers will be able to choose whether they want to use either their 2019 or 2020 earned income to calculate the Earned Income Tax Credit on their 2020 income tax returns, thanks to a one time lookback provision.
If you want to get the credit, you do have to file a federal return, even if no tax is owed and even if there is no requirement to file a federal return. (USA Today)