2021 tax changes
That means, any unemployment compensation you received will be subject to income taxes. What’s different: For 2021, the tax law changes back to what it was before 2020. However, if you had unemployment income in tax year 2020, you were able to exclude up to $10,200 of that compensation as income. Why it matters: As a refundable credit, this tax benefit not only lowers the tax you owe, it also can mean getting money back.
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2021 tax changes pro#
With the changes above and the potential for a delay related to using the Lookback Rule, it could really payoff to have the right tax expert on your side-whether you file with an H&R Block tax pro or receive their unlimited help when you file with H&R Block Online Assist. Why it matters: The Earned Income Credit is a refundable credit, meaning after it helps reduce your tax bill, you could potentially get money back. However, take note, using your 2019 income may require some additional time to process your refund. On top of these changes, you can also choose to use your 2019 income to calculate your Earned Income Credit amount if your 2019 earned income is larger than your 2021 earned income and that provides a larger credit (this is called the Lookback Rule). These changes are only in place for 2021 taxes. Additionally, changes around age limits generally lowered the bottom age limit to 19 and now allow for those without children to claim the credit if they are 65 or older. What’s different: Changes in 2021 expanded the maximum credit for childless workers from $538 to about $1,500, making the credit more valuable for this group. The Earned Income Tax Credit has always been a valuable tax credit but understanding who is eligible for it has always been a bit complicated.
2021 tax changes how to#
Find out more about Letter 6419 and how to validate your amounts if you don’t have your letter.
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Why it matters: To avoid lengthy tax refund delays, you’ll want to use the amounts shown on your Letter 6419 to report your advance payments and claim the rest of your credit. The IRS will send Letter 6419 to you in January, which will show the amount of advance payment you received. You’ll need to accurately report the advance amount on your 2021 returns in order to claim the remainder of your credit. What’s different: This is the first time this credit has been sent in advance. With this 2021 tax law change, up to half of the credit was paid as advance payments, while the other part can be claimed when you file. The Child Tax Credit was expanded in 2021 to provide more money for more families. Find out more about Letter 6475 and how to validate your amounts if you don’t have your letter. Why it matters: To avoid lengthy tax refund delays, you’ll want to use the amounts shown on your Letter 6475 to report your payment and claim any additional money. These letters weren’t sent for 2020 stimulus payments. What’s different: The IRS will send out Letter 6475 in January, which will show the amount you received for 2021. If you didn’t get every dollar you should have, you can claim a Recovery Rebate Credit to get the money you deserve.
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You’ll need to report any stimulus payments you received in the spring of 2021 on your tax return.
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Stimulus Payments/Recovery Rebate CreditsĮmployer incentives and payroll credits for small business Stimulus payments and Recovery Rebate Credits No matter if you file taxes online, or with an H&R Block tax pro or Block Advisors tax pro, we’re here for you. Get help navigating 2021 tax law changes. Take a look at the topics below and click-through to skip ahead to the changes that matter most to you.
2021 tax changes plus#
We’ll cover the top tax law changes for 2021 and outline what’s different, plus why it could matter for you. Luckily, the team at Block is here to walk you through the must-know tax law changes for 2021, so you can file with confidence.