The massive, sudden and prolonged unemployment caused by COVID-19—especially among low-income, people of color, and women in 2020—may have critical tax implications. Millions of working families could receive tax refunds up to 80% below their 2019 refund, driven by decreased tax credits. Tax credits are lifelines for low-income households, especially single parent households led by women of color.
For many low-income working families tax refunds are normally the single largest lump sum of money they’ll see all year. As such, it’s foundational to their financial wellbeing. Long experience and research tell us many families anticipate and count on these refunds as a moment to pay down debt, build up savings, make deferred purchases—and experience a brief reprieve from chronic financial anxiety. It’s hard to overstate the importance of tax refunds.
Households at risk of reduced refunds include: