The drop in income from job loss could mean
some households are eligible for deductions and
credits that they did not qualify for in the past,
such as the earned income tax credit or child and
dependent care credit, said Lisa Greene-Lewis, a
CPA and tax expert at TurboTax. The size of some
credits may also change based on income.
RELIEF CHECKS
As part of the CARES Act, a relief package passed
early in the pandemic, millions of Americans
were given payments of $1,200 per adult and
$500 per child. At last count, the IRS said 160
million payments totaling about $270 billion
have been delivered by direct deposit, paper
check or prepaid debit card.
That money is not taxable.
However, what many people do not realize is
that the money they received is actually an
advanced payment on the Recovery Rebate
Credit for 2020 tax filers, said Dina Pyron, Global
TaxChat Leader at Ernst & Young.
As such, people who did not receive their
payment or only got a partial payment can
resolve this issue on their 2020 taxes when they
file. If you were overpaid, you will not owe.
Also, if you did not get a relief check because
your income was too high, but it has since fallen
in 2020 and made you eligible, you also can get
the payment via this credit.
WORKING FROM HOME
Working from home became the norm in 2020
for many people, but most won’t likely be able
to claim expenses for their new work-from-
home setup.