![]() ![]() There's generally no need to rush to prepay a mortgage because interest rates are usually low. And of course many people entered the pandemic with debt hanging over their heads. Pay off some costly debtĪ lot of people had no choice but to rack up debt during the pandemic. If you can boost your cash reserves so you have more – about six months' worth – even better. Generally speaking, it's a good idea to have at least three months of essential living expenses in your savings account. So if your emergency fund needs work, put your tax refund directly into savings. If the pandemic has taught us anything, it's the importance of having money in the bank for unplanned expenses or circumstances. If you're getting a refund for the taxes you paid on unemployment income last year, here are some things you can do to maximize the impact of this IRS refund. Stimulus checks: IRS sends nearly 1M more COVID relief payments, including 'plus-up' payments And while the IRS hasn't said how many taxpayers in total it expects to issue refunds for due to this change, that number could climb substantially by the time this year's tax season wraps up. ![]() So far, a good 7.3 million tax returns processed by the IRS are due a refund based on the tax-free unemployment rule. This means that a lot of people who received jobless benefits last year are in line for a refund on their 2020 taxes, which are due May 17. The relief package also boosted unemployment for those still collecting jobless benefits while also making $10,200 in unemployment benefits tax free for 2020. The $1.9 trillion American Rescue Plan is perhaps best known for putting $1,400 stimulus checks in Americans' bank accounts. Watch Video: 2020 taxes: Do you owe taxes on stimulus checks or unemployment? ![]()
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