Tax Filers May Have To Wait To Claim All Stimulus Benefits

Mar 25, 2021, 6:07 PM
The unprecedented events of 2020 changed so much about life as we knew it. (Shutterstock)...
The unprecedented events of 2020 changed so much about life as we knew it. (Shutterstock)

(CNN) –  Millions of struggling Americans are already accessing the assistance from the Democrats’ $1.9 trillion relief package that President Joe Biden signed earlier this month — including stimulus payments and enhanced unemployment benefits.

But not all the aid in the massive law will be available right away. In fact, eligible Americans won’t fully benefit from several of the provisions — such as the new child tax credit — until a year from now, when they file their 2021 tax returns.

“We are going to see these waves of relief,” said Kathy Pickering, chief tax officer at H&R Block. “There is certainly relief that’s coming right now and over the summer as part of the American Rescue Plan. And then there will be other provisions that people will file on their tax return next year to be able to get additional benefits.”

Federal agencies are still determining the timing on some of the measures.

For instance, the Internal Revenue Service Commissioner Charles Rettig last week said that the agency will likely be able to automatically issue refunds to jobless taxpayers who are now eligible for a tax break on their first $10,200 in federal unemployment compensation but filed their returns before the law was signed in early March.

Here are some benefits you may not see until next year at tax time:

Child Tax Credit

Many families will benefit from changes lawmakers made to the child tax credit. But they’ll have to wait until next year to collect at least half of the money.

Congress boosted the credit to $3,600 for each child under 6 and $3,000 for each child under age 18 for 2021. Until now, it was up to only $2,000 per child under age 17. The stimulus package also made the credit fully refundable so more low-income families can benefit.

Another key change is that parents can receive half the credit in periodic payments this year, starting as early as July. But they’ll get the rest with their tax refunds next year. Just how it will work will depend on how quickly the thinly-staffed IRS can implement the provisions.

Families can also opt to receive the entire credit as a lump sum at tax time, which is how it has worked until now.

Earned Income Tax Credit

More workers without children will qualify for the earned income tax credit for 2021, and the maximum amount they can receive will nearly triple.

But they won’t be able to take advantage of these enhancements until they file their taxes next year.

The relief package hikes the maximum credit childless workers can receive to $1,502, up from $543. Also, the minimum age to claim the childless credit will be reduced to 19, from 25, and the upper age limit will be eliminated.

This is the largest expansion to the earned income tax credit since 2009.

Child, Dependent Care Tax Credit

The relief package provides more help for families with child, senior and dependent care expenses for 2021.

It beefs up the child and dependent care tax credit to cover half of care costs up to $4,000 for one child or dependent and $8,000 for two or more children or dependents.

But again, families won’t see the benefits until they file their returns next year.

Stimulus Payments

Most people should receive the third stimulus check automatically through a direct deposit or from a paper check or debit card sent in the mail.

But those who lose their jobs or income this year, making them eligible for the payment, will have to wait until filing their 2021 tax return to get the money.

Also, there’s a chance that those who normally don’t file tax returns because their income is too low — and who did not submit their information online to the IRS last year for previous stimulus payments — may miss out.

That’s why the IRS is urging those people to file a 2020 tax return this year even if it’s not otherwise required. The latest stimulus payment is technically an advance on a 2021 tax credit, so those who don’t end up filing a 2020 return this year will have a second chance to claim it on their 2021 return.

Affordable Care Act Subsidies

The relief package increased the generosity of the Affordable Care Act premium subsidies and made more people eligible for them.

But many current enrollees will likely have to return to the Obamacare exchanges to tap into the beefed up assistance or wait until tax time next year.

It will depend on where one lives. California, which runs its own exchange, will automatically provide the enhanced subsidies to current customers starting May 1. The Centers for Medicare and Medicaid Services is looking into doing the same later this year.

Those with Obamacare coverage or looking to sign up for a policy can start accessing the larger subsidies on the federal exchange on April 1. States that run their own exchanges are setting up their own timetables.

Enrollees will pay no more than 8.5% of their income toward coverage, down from nearly 10%. And lower-income policyholders will receive subsidies that eliminate their premiums completely.

Also, those earning more than 400% of the federal poverty level — about $51,000 for an individual and $104,800 for a family of four in 2021 — are now eligible for help for the first time.

The law allows those collecting unemployment benefits to sign up for Obamacare coverage with no premiums in 2021. However, since this subsidy doesn’t currently exist, it will take longer to set up.

KSL 5 TV Live

Top Stories

National News

U.S. President Joe Biden delivers remarks at the National Prayer Breakfast at the U.S. Capitol on F...
Colleen Long and Chris Megerian, Associated Press

Biden urges unity at prayer breakfast under new management

President Joe Biden attended the annual National Prayer Breakfast on Thursday in Washington and delivered a message of unity.
12 hours ago
FILE: Groundhog handler AJ Derume holds Punxsutawney Phil, who saw his shadow, predicting a late sp...
Associated Press

Phil’s Groundhog Day prediction: 6 more weeks of winter

A furry critter in a western Pennsylvania town has predicted six more weeks of winter during an annual Groundhog Day celebration.
12 hours ago
Law enforcement officers aim their weapons at a home during a standoff in Grants Pass, Ore., on Tue...
Associated Press

Oregon kidnapping suspect dies of self-inflicted gunshot

The suspect in a violent kidnapping in Oregon has died of a self-inflicted gunshot wound.
1 day ago
Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open M...
Christopher Rugaber, AP Economics Writer

Fed lifts rate by quarter-point and signals more hikes ahead

The Federal Reserve extended its fight against high inflation Wednesday by raising its key interest rate by a quarter-point, its eighth hike since March.
1 day ago
Six-year-old Mason Stonehouse was playing on his dad’s phone before bedtime and spent about $1,00...

Michigan six-year-old orders $1,000 worth of food on Grubhub

A six-year-old as playing on his dad's phone before bedtime and spent about $1,000 on Grubhub orders.
1 day ago
FILE - U.S. Secret Service agents are seen in front of Joe Biden's Rehoboth Beach, Del., home on Ja...
Eric Tucker, Colleen Long and Zeke Miller, Associated Press

Biden lawyer: FBI finds no classified docs at beach house

The Federal Bureau of Investigation searched President Joe Biden's vacation home in Rehoboth Beach, Delaware, on Wednesday without finding any classified documents, the president's personal attorney said.
1 day ago

Sponsored Articles

vintage photo of lighting showroom featuring chandeliers, lamps, wall lights and mirrors...
Lighting Design

History of Lighting Design | Over 25 Years of Providing Utah With the Latest Trends and Styles

Read about the history of Lighting Design, a family-owned and operated business that paved the way for the lighting industry in Utah.
Fiber Optical cables connected to an optic ports and Network cables connected to ethernet ports...
Brian Huston, CE and Anthony Perkins, BICSI

Why Every Business Needs a Structured Cabling System

A structured cabling system benefits businesses by giving you faster processing speeds and making your network more efficient and reliable.
notebook with password notes highlighted...
PC Laptops

How to Create Strong Passwords You Can Actually Remember

Learn how you can create strong passwords that are actually easy to remember! In a short time you can create new ones in seconds.
house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 Reasons You May Want to Consider Apartment Life Over Owning a Home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to Choose What MBA Program is Right for You: Take this Quiz Before You Apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Tax Filers May Have To Wait To Claim All Stimulus Benefits