Many clients have received letters from the IRS explaining that their federal tax refund has been adjusted due to the Recovery Rebate Credit (RRC) that was included on their 2020 tax returns. Read on to find out what to do if you get a letter.
Changes to The Child Tax Credit
Some changes were made to the Child Tax Credit for 2021, and many clients have been receiving advance payments of the credit as a result. In general, we recommend that you unenroll from the advance payments of the CTC to avoid getting bad news when the time comes to prepare your 2021 tax returns.
Tax Changes to Unemployment Income
The Rescue America Act will make unemployment benefits received in 2020 partially non-taxable, if it passes. Iowa has already passed a similar law. Good news for folks who received unemployment income last year! Not-so-good news for the people trying to prepare tax returns while the laws that affect those returns are being changed.