UE & head of household

[Karen G]

How does UE count as income for 2021 taxes if that was your only source of income? Will I still be able to file head of house and claim my 3 dependents if I didn’t work on 2021 at all and only received UE compensation? Will I have to owe back the child tax credit? 

[Akil C · Accepted solution]

Hi Karen!

Thanks for your question! Up until today, Unemployment income is still 100% taxable on the 2021 income tax return, until the federal government announces otherwise. So stay tuned! As head of household, as long as your 2021 unemployment is less than $18,800, you wouldn't have to pay tax on it anyway, assuming you earn no other income. 

Having that said, you will not have to pay back any of the advanced child tax credit that you have received. The new provisions of the 2021 child tax credit make the credit fully refundable. Fully refundable means that whether you owe tax or not, you are eligible to get the full $3,000 - $3,600 per eligible child.  You cannot lose it for earning too little, but you can limit it by earning too much.

I hope this answers all your questions. If not, just ask and I'll be happy to assist! Thanks! Akil C.