Save up to $50,000 with new COVID credits and benefits for 2021. Here's how
Your family could be qualified for some of the new and expanded tax credits, health care plans and more benefits available this year. Here's everything you need to know.
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Managing Editor Alison DeNisco Rayome joined CNET in 2019, and is a member of the Home team. She is a co-lead of the CNET Tips and We Do the Math series, and manages the Home Tips series, testing out new hacks for cooking, cleaning and tinkering with all of the gadgets and appliances in your house. Alison was previously an editor at TechRepublic.
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This year, you could be one of the millions of people who will see extra savings due to new tax breaks, tax credits and expanded health benefits that lawmakers approved in the $1.9 trillion stimulus bill and other means as a way to help people get through the pandemic. These cash-back and money-saving benefits, which the IRS is still sending out now, arrive along with the third stimulus check for up to $1,400 per person and their dependents (you can track your stimulus check here).
Whether you are eligible for these new benefits depends on several different things, including your adjusted gross income, if you have children or if you have COBRA health insurance -- which means not everyone will be able to claim every item listed here. But for many people, these changes could end up saving you hundreds or even thousands of dollars.
Here are seven of the tax credits and health savings you can claim this year that could potentially bring your family a maximum of around $50,000, depending on your personal situation.
Watch this: Stimulus plus-up payments: What you need to know
$20,576 maximum per family: Free COBRA insurance premium coverage runs through September
Typically, if you lose your job, you can buy insurance coverage through your former employer under the government Consolidated Omnibus Budget Reconciliation Act program. However, you usually have to pay the full price for that insurance, which can be very costly. While it's difficult to estimate COBRA costs, as plans vary depending on how much your insurance plan cost your former employer, the average annual premiums for employer-sponsored health insurance in 2019 were $7,188 for single coverage and $20,576 for family coverage, according to a report from the Kaiser Family Foundation.
Under the March law, the government will pay COBRA premiums for laid-off employees and family members from April 1 through Sept. 30. (However, you're not eligible if you have Medicare, if you left your job voluntarily or if you qualify for new, employer-provided health insurance before that date.)
The stimulus law requires employers to send former workers who qualify for COBRA a notice of eligibility. But if you haven't gotten that, you can call your former employer to make sure you are signed up for coverage. In addition, some states may have their own version of reduced health care, including California.
Watch this: Stimulus check 3: How much money you'll get
$6,660 maximum per family: Earned income tax credit
Designed to benefit people with lower incomes, the earned income tax credit can reduce your taxable income and wages. Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, part of the December coronavirus relief package, you can use your 2019 or 2020 amount of earned income to calculate your tax credit for 2020 -- a potentially important provision for people who lost their jobs during the pandemic.
Eligibility for EITC depends on your adjusted gross income, filing status (single, head of household, widowed or married) and number of dependents claimed. Here are the income requirements needed to qualify for the earned income tax credit this year, according to the IRS:
Tax year 2020 income requirements to claim the earned income tax credit
Children or Relatives Claimed
Maximum AGI (filing as Single, Head of Household or Widowed)
Maximum AGI (filing as Married Filing Jointly)
If you meet those income requirements, here's how much money you can claim for the earned income tax credit on your 2020 tax return:
No qualifying children: $538
One qualifying child: $3,584
Two qualifying children: $5,920
Three or more qualifying children: $6,660
Note that if you claim this credit the IRS may request additional information, which could result in your refund being delayed.
$3,600 maximum per dependent: Child tax credit
The child tax credit is designed to benefit working families by allowing them to claim a refundable credit per qualifying child. Under the new stimulus law, the amount you can claim has gone up: Instead of the previous $2,000 per child, you can now claim $3,600 per child for kids 5 years old and under and $3,000 for children between 6 and 17. Older kids could bring you $500. There are certain income limitations -- find out if your children qualify here, and use our child tax credit calculator to estimate how much money your family might be eligible for.
To make child care more affordable, the new stimulus law provides a child care tax credit for kids under age 13 -- a total of up to $4,000 for one child, or $8,000 for two or more children. The credit is refundable and available to families making less than $125,000 a year. Those making between $125,000 and $400,000 may receive a partial credit. Find out more from the IRS here.
$1,000 maximum per person: Saver's credit
If you've made eligible contributions to an IRA or an employer-sponsored retirement plan, you might be able to claim a saver's credit. To do this, you need to be age 18 or older, not be claimed as a dependent on someone else's return and not be a student. The amount you can claim depends on your adjusted gross income, and will be a portion of the contributions you made. The maximum credit you can claim is $1,000 ($2,000 if you're married filing jointly). The IRS has a chart to help you calculate your credit.
Watch this: Your tax questions answered in 3 minutes
$7,500 maximum per person: Credit for older adults and people with disabilities