Two tax changes you need to know if you lost your job in 2020

Posted at 2:42 PM, Mar 16, 2021
and last updated 2021-03-16 17:48:10-04

NORFOLK, Va. - If you were hit hard by the pandemic financially, there are some new tax rules that could impact you.

One of them is called the "lookback" rule.

It went into effect in December and impacts the credits you can claim.

Since things like the earned income credit and child tax credit are based on your income, this change helps people who lost their job or had their hours cut.

"Our elected officials quickly realized that for 2020, a lot of Americans are going to have lower income and consequently lower credits, and that’s not a good thing in the pandemic. So, they passed this "lookback" rule that says, 'OK, you can use your 2020 income or you can look back and use your 2019 tax return income in calculating your current year credits,'" explained Mark Steber, Chief Tax Information Officer with Jackson Hewitt.

Another change you should know about has to do with unemployment.

Related: 'This is a tax season like no other': Three of the biggest questions seniors have surrounding this year's taxes

Normally it's fully taxable, but a recent change now waives the first $10,200 of benefits.

That change was just made last week as part of the $1.9 trillion American Rescue Plan.