From stimulus checks to unemployment insurance, here's how 2021 Covid-19 relief can affect your 2022 finances

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Much of the Covid-19 relief provided by the federal government to individuals was disbursed throughout 2020 and 2021 — but it can still affect your finances in 2022.

The third stimulus check, unemployment insurance changes, the federal student loan pause and the enhanced child tax credit were all part of the government's relief package last year. Aside from the loan pause, none of the other measures apply in 2022 (at least so far).

But they could affect your tax bill this year, and many families' returns could be smaller than usual as a result. Here's what to keep in mind about Covid-19 relief in 2022.

Advance child tax credit

The enhanced child tax credit has not been extended into 2022, but the 2021 payments will still affect your tax bill.

The credit was increased from up to $2,000 to as much as $3,000 to $3,600 per child in 2021. Many families received half of the larger payment throughout 2021 in monthly installments worth as much as $250 to $300 per child. Everyone will receive the other half of it (and families who opted out of advance payments will receive the full amount of the credit) when they file their 2021 tax returns.

Overall, many families received much more money. But because half of the payment was made in advance for the first time, families may receive a smaller tax refund than they are used to.

A family with a 10-year-old that qualified for the full $3,000, for example, could have received $1,500 throughout 2021. That means they can claim the additional $1,500 on their tax return — less than the $2,000 they typically claim. With more children, the difference grows even larger.

Additionally, the CTC was based on 2020 income information. If a parent or household's income was much different in 2021, they could have to repay some of the credit.

Unemployment insurance

The Democrats' American Rescue Plan waived federal taxes on up to $10,200 of unemployment benefits per person for 2020. But for 2021, there is — as of yet — no similar relief being offered. Filers will have to pay taxes on the benefits as usual.

Unemployment has rebounded significantly since the start of the coronavirus pandemic. But around 25 million people still applied for jobless benefits at some point in 2021. If they did not have taxes withheld, or withheld too little, they may owe some of that back come tax season.

Stimulus checks

A bit of good news: Those who are eligible to receive the third coronavirus stimulus check, which was disbursed last year, but never received it could finally get their payment when they file their 2021 taxes.

The payments were worth up to $1,400 for each qualifying individual and their dependents. Those who didn't receive one, or received less than they should have, can claim the Recovery Rebate Credit on their 2021 returns. This is true even for people who do not normally file a tax return.

The third payments were initially based on 2019 income to expedite the disbursal process, though technically they should be based on 2020 income. To rectify the situation, the IRS began sending plus-up payments to those who earned too much in 2019 to qualify, but lost income in 2020.

However, there may still be people who are eligible for the check who did not receive it, or received too little. For example, if an eligible individual had a child in 2021, they can now claim that dependent on their 2021 tax return.

The IRS is sending a letter about the stimulus payments out to taxpayers at the end of January, which can be used to figure out if they are eligible for more money.

Those who earned less in 2019 than in 2020 will not owe the IRS any of the stimulus money back.

Student loan pause

The pause on federal student loan payments began in March 2020 and was recently extended through May 1, 2022. In addition to monthly payments being paused, interest was set at 0% for many borrowers.

While that is a relief to many, it also means that they cannot write off student loan interest on their 2021 taxes. Normally, borrowers can deduct up to $2,500 of interest. For some borrowers, that could be a few hundred dollars that they can no longer deduct.

That said, many people can still deduct interest, including those with private loans and those with federal loans that did not qualify for the pause.

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