GREENSBORO, N.C. — Tax day is fast approaching.
The May 17th deadline is a little over two weeks away.
There are a lot of changes this tax season and J.W. Degance, District Manager for Jackson Hewitt of Greensboro, joins 2 Wants to Know to answer questions about the tax season.
Third Stimulus Check
Signed into law on March 11 – includes a third round of Economic Impact Payments (EIP), or stimulus.
Third stimulus payments:
- $1,400 per eligible taxpayer (phasing out between $75,000 and $80,000 for Single/Married Filing Separately taxpayers).
- $2,800 per eligible married couples (phasing out between $150,000 and $160,000 for Married Filing Jointly taxpayers).
- $1,400 per qualifying dependent with an SSN – both a child and non-child dependent regardless of age (phasing out between $112,500 and $120,000 for Head of Household taxpayers).
Eligible taxpayers will be able to claim the Recovery Rebate Credit on their 2021 tax return to reconcile any additional amounts they are owed as an EIP 3 (third stimulus) payment.
Unemployment Benefits
Taxpayers who received unemployment benefits in 2020 are now eligible for different tax treatment of their unemployment benefits if their income is less than $150,000. The first $10,200 in unemployment income per taxpayer is tax-exempt.
The IRS just announced on March 31 their process for how taxpayers who have already filed their 2020 taxes can claim the first $10,200 as tax-exempt
They will be automatically refunding money this spring and summer to those people, taxpayers will NOT need to amend their 2020 tax return. More details to come in the coming weeks on how this process will work.
Earned Income Tax Credit & Child Tax Credit Changes
Child Tax Credit:
Beginning in tax year 2021 (the taxes you file in 2022) the Child Tax Credit will be expanded. The bill increases the amount that families claiming the Child Tax Credit receive from $2,000 to:
- $3,600 for each child under 6
- $3,000 for each child age 6-17
Although this credit is for next year’s tax filings, payments will also be sent in advance, over the course of the year, beginning no earlier than July 2021 so people don’t have to wait to file their 2021 taxes. The IRS will likely determine eligibility based on your most recent tax filing.
Earned Income Tax Credit:
The Earned Income Tax Credit, which is one of the most overlooked credits every year had some pro taxpayer changes too in the American Rescue Plan Act of 2021. For the first time, taxpayers without children will be able to get nearly triple of last year’s amount. It’s the largest expansion to EITC since 2009 – which is huge for taxpayers who now qualify for the credit. The Credit is now up to $1,502 per taxpayer (up from about $543 in prior years).
The minimum age to claim the childless EITC has been reduced from 25 down to 19.
The maximum income for the childless EITC has increased, meaning more taxpayers will qualify.
