Screen Shot 2020-12-14 at 11.26.47 AM

Preventing a Crisis at Tax Time 2021

Why Congress’s new EITC lookback is critical for low-income families’ tax refunds

The massive, sudden and prolonged unemployment caused by COVID-19especially among low-income, people of color, and women in 2020may 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.


IMPORTANT UPDATE

Congress recently passed a major COVID relief package, providing much needed economic relief to tens of millions of American families. Crucially, the package includes a “lookback provision,” which will ensure millions of low-income working families will continue to be eligible for vital refundable tax credits and will receive the tax refunds they rely on.


What you can do

If you are a direct service organization, think tank, tax prep provider, technology platform, or government official you have an important responsibility in ensuring  low-income families benefit from the lookback.

understand-01-1

Communicate. Communicate to your low-income tax filers

 

sign up. To act on this problem, stay informed

 


Understand the Problem

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:

  • Those who were unemployed for much of 2020 
  • Expected to make up to $25k before the pandemic 
  • Households with children
tax time landing page graphics-01-1

commonwealth logo
neighborhood trust financial partners logo
SaverLife Horizontal

Stay informed. Sign up for Commonwealth’s email and hear from senior policy manager, Jason Ewas.