So what happens now with unemployment? And what happens next year with all the advanced child tax credits, stimulus? Do we have to pay all that back?
Not sure what you are trying to ask. If you receive unemployment in 2021 it will have to be entered on your 2021 tax return. We do not know yet if Congress will do anything different by tax season but at this time 2021 unemployment is taxable income on a 2021 return. You are not taxed on stimulus money nor are you taxed on the child tax credit payments.
Unemployment falls under the American Rescue Plan. See below:
For tax year 2020, As part of the American Rescue Plan, the first $10,200 worth of unemployment payments are now tax-free for a person with an annual modified adjusted gross income of less than $150,000. This expanded tax relief begins this year, starting for taxpayers filing returns after January 1, 2020. If you filed your tax return before the law was enacted then the IRS will automatically send the refund, if the adjustment did not affect other areas of your tax return. The IRS has been making adjustments on tax returns and issuing refunds. If you have not received your refund yet, the IRS has said that they will be sending refunds throughout the summer which doesn’t officially end until September 22nd.
Additional information can be found here: https://blog.turbotax.intuit.com/tax-news/am-i-eligible-for-the-new-unemployment-income-relief-49427...
Regarding the Child Tax Credit: the IRS is issuing advanced Child tax credits for now. As far as we know these are not to be paid back, nor are the stimulus payments we received.
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The advance Child Tax Credit payments are advance payments of the Child Tax Credit on your 2021 tax return. If the advance payments that you receive are more than the Child Tax Credit on your 2021 tax return you will have to pay back the excess, unless you qualify for repayment protection. The questions and answers at the following link on the IRS web site explain the repayment rules.