Less Income Due to COVID-19? Here's How to Bolster Your Money In 2021
If you're one of the millions of people around the globe who's earning less money than before, you know how daunting the experience can be. Though many locations have COVID-19 safety mandates in place, most don't have any income safety nets in place.
Even if you're working and earning money, you may still be eligible for these cost-savers. Most of these have been released in the past year to help those affected by COVID.
Kiss Your Cell Service Bill Goodbye!
In most states, taxes alone on a cell phone bill constitute about one third of what you end up paying! So, where does all this money go? A large chunk of it goes to the FCC's lifeline program.
You can use your 2020 Adjusted Gross Income to qualify. Additionally, if you receive benefits such as Medicaid, SNAP, or other federally-funded items, you may automatically qualify for LifeLine. Unlike Medicaid, states do not have a choice whether to implement this or not. The threshold is 135% of the current Federal Poverty Line (FPL), regardless of which state you're in. Unfortunately, this tends to disqualify many in higher cost-of-living states. Only Texas, California, and Oregon have their own monetary determination policies. However, the FCC has mandated that no state can set the bar lower than 135% of the FPL.
As soon as you apply for the LifeLine service, you should get an instant "yes" or "no" response. Remember, it's technically felony perjury to lie on this form, so don't fudge your income! If something isn't clear, LifeLine has staff you may call (check LifeLine.org for contact options) for clarification. If you qualify, you'll see a list of companies.
Tip: Research LifeLine providers wisely. There's a minimum level of wireless benefit each must provide that's based on your zip code. It's become a fairly competitive industry, so some companies offer perks, like providing a free phone for you to use with their service!
Single Person Earned Income Tax Credit
Though the extended Child Tax Credit has been discussed in the news thoroughly, the EITC increase was less noticed. This credit is "refundable", which means that you can actually receive money from the IRS if the credit is greater than the amount of tax you owe.
For those without children, the income cap has been raised to just under $22,000. This is up from what it's been for tax years 2020 and prior, set at around $15,000. For childless adults (19 or over), as long as you have a source of income that's considered "earned," such as work, and you make under this threshold, you qualify! You may get a portion of the increased amount of approximately $1,600; however, it should be enough to cover all or most of your taxes.
Federal Unemployment Insurance Tax Break
For those receiving Pandemic Unemployment Assistance (PUA), traditional Unemployment Insurance (UI), or any other approved benefits program for underemployment or unemployment, there's help on the way! Starting retroactively in 2020, you qualify for a federal tax break. Unfortunately, most states, minus a handful including New Jersey and Virginia, collect income tax on all unemployment payouts. The seven states that collect no income tax also do not collect tax on unemployment payouts.
However, traditionally, the federal government has collected income tax, but not Medicare or Social Security tax on unemployment-related income. Now, you'll get a full exemption on federal income tax for the first $10,200 you receive annually from unemployment compensation! Remember, the normal withholding rate for unemployment payouts is 10%.
That means that you'll save more than $1,000 in federal income tax if you receive at least $10,000. You'll need to pay regular income tax on any amount you receive that's over $10,000. Keep in mind that this actually subtracts $10,000 from your AGI; this can affect eligibility for other benefits programs. In states where Medicaid has been expanded, for example, you may find yourself now eligible for those benefits.
More Help Is On the Way!
As President Joe Biden said, the aid that's been provided is merely a "down payment" to the American people. Many people are struggling to get by right now, but with untaxable stimulus money continuing to come in, a federal commitment to unemployment payouts as long as the pandemic lasts, a sweeping eviction moratorium, and more benefits expansions, there's hope!
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