Here are some pandemic
tax facts you may not know
Tax season looked a little different during the pandemic. New tax
breaks were created to support millions of individuals, families, and businesses.
Learn more about a few of these below.
Unemployment Tax Break
The Top Line:
Nearly 40 million people received unemployment benefits in 2020, with the average recipient receiving $14,000 in assistance. Due to a provision in the American Rescue Plan Act, the benefit was nontaxable up to $10,200 for individuals and $20,400 for married couples.
The Bottom Line:
The Internal Revenue Service (IRS) recently completed correcting the accounts of taxpayers who overpaid their taxes on unemployment compensation they received in 2020. These corrections resulted in nearly 12 million refunds totaling $14.8 billion, with an average refund of $1,232.
Child Tax Credit
The Top Line:
The American Rescue Plan Act also expanded the Child Tax Credit to help families in 2021. The fully refundable credit increased from $2,000 to $3,600 for qualifying children under 6, and eligible taxpayers could receive $3,000 for children between the ages of 6 and 17. If eligible, you could receive 50% of the credit in advance and claim the remaining amount when you filed your tax return.
The Bottom Line:
The Treasury Inspector General for Tax Administration reviewed 178.9 million advanced Child Tax Credit payments totaling more than $76.7 billion and found that the IRS correctly sent 98% of them to taxpayers.
Employee Retention Credit
The Top Line:
Created in the CARES Act, the Employee Retention Credit (ERC) is a tax credit that employers can use to offset employment taxes. The credit is a certain percentage of qualified wages paid, allowing employers to receive up to $5,000 per employee in 2020 and up to $28,000 per employee in 2021. To qualify, employers must have owned a business during the period they are claiming the credit, had a decline in gross receipts, or either fully or partially suspended operations due to the pandemic.
The Bottom Line:
Recently, the IRS warned the public about ERC "promoters" who charge large fees to businesses and individuals by misleading them into thinking they are eligible to claim the credit.
To view more reports on our findings, tax-related or otherwise,
visit our Reports Library.
|
