Policy Spotlight: EITC, Child Tax Credit, Health Insurance (Free COBRA)
As the end of Financial Capability Month approaches and the extended federal tax deadline of May 17 comes into focus, we spotlight a few available resources for our clients on getting the biggest EITC tax refund possible, updates to the Child Tax Credit, free tax prep, and free COBRA health insurance.
Did you earn less in 2020? You could qualify for a bigger EITC refund!
The Earned Income Tax Credit lookback provision included in the stimulus signed in December enables filers who earned less in 2020 compared to 2019 to choose 2020 or 2019 earned income when determining EITC eligibility, whichever yields you the biggest return! 2020 income eligibility tops out at $56,844 for households with three or more children with EITC refunds from $2 to $6,600 depending on marital status and children.
Update to the Child Tax Credit
Usually you see the child credit after you file your taxes but this year if you and your family qualify you’ll get the money in a series of payments through the end of 2021 and into 2022, with the first payments arriving as early as July. The payments in total can range from $3,000 to $3,600 per child, $300 per month for each child age 5 and under and $250 for each child age 6 to 17 (there will be a one-time check for $500 for qualifying dependents ages 18 to 24). The payment method is still unclear. More details are expected soon from the IRS but it may be similar to how individuals receive their stimulus checks.
FREE tax assistance through VITA
Many of our clients don’t know that they’re eligible for free tax assistance and filing through the IRS’ Volunteer Income Tax Assistance (VITA) program which offers free tax preparation help to people who generally make $57,000 or less. You can find a local VITA site on the IRS website.
COBRA available for free through September to eligible people who lost their job in last 18 months
Eligible people who lost their job in the last 18 months are able to get free COBRA coverage through September 30th as part of the American Rescue Plan Act. Qualifying criteria for COBRA include “job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events,” according to the U.S. Department of Labor.
Under the bill, anyone is eligible who has involuntarily lost their job or health insurance or had their hours reduced within the last 18 months. Employers have been given a deadline of May 31 to contact anyone this new coverage applies to, so you could miss out on almost two months of free coverage if you’re eligible and your previous employer doesn’t contact you before then — so contact them today!
