Finances During COVID Times


Things to know when preparing taxes, insurance, and more 

By Jennifer Mellace

As 2021 comes to a close, COVID-19 is still top of mind for many; looking back on this year is like looking at a watered-down version of 2020. While the year began with many folks still in lockdown, the spring and early summer offered hope in the way of vaccines and a lift of the mask mandate. Of course, the COVID-19 Delta variant has set us back and changed that sense of freedom. Yet, life moves forward.

With the end of the year comes thoughts of taxes and financial questions based on the 2021 American Rescue Plan, a $1.9 trillion emergency legislative package designed to provide the resources needed to address the ongoing COVID-19 public health crisis and spur a strong economic recovery. With this package came economic impact payments, an increased child tax credit, unemployment, and more, including changes to the Affordable Care Act and how you file your 2021 taxes. 

Based on these changes, here are some ways you can prepare: 

Economic Impact Payments

In 2021, families received financial assistance based on their recently filed 2020 tax return—up to $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent. Additional outreach from the U.S. Treasury Department and the Internal Revenue Service (IRS) made sure that the homeless, rural poor, and other disadvantaged Americans received their payments through homeless shelters and legal aid clinics. 

Need to Know: These payments are non-taxable income that does not need to be paid back. So, if you received a payment, it will not affect the amount of your tax refund for 2021.  

Child Tax Credit

The American Rescue Plan increased the amount of the Child Tax Credit from $2,000 to $3,600 for children younger than age 6, and $3,000 for other children younger than 18. The payments, based on eligibility, are being made through advanced periodic payments that started July 1 and run through December 31, 2021. The point of this change is to allow struggling families to receive financial assistance now, rather than waiting until the 2022 tax filing season to receive the Child Tax Credit benefit.

Need to Know: This credit is fully refundable, allowing low income households to receive the full credit benefit.  “Folks who typically don’t file their taxes because of low income should do so this year,” says Scott Hill, an investment advisor with Hill Financial Solutions. “People should also make sure that they set up an electronic transfer at their bank to increase the speed of receiving their money.” 

Low income families who may not normally file a tax return can use the IRS’s non-filers sign-up tool to register for the monthly advance child tax credit payments.

Hill also advises people who filed their taxes late in 2021 to be mindful of reconciliation—in case you received refunds that you were not entitled to get. In other words, if it turns out the IRS overpaid your child tax credit due to your financial or personal circumstances changing since your most recent tax return (i.e., your filing status, income, custody arrangements, or residency status), you may need to reconcile that on your tax return at the end of the year. 

Unemployment Compensation

The COVID-19 pandemic forced millions of Americans into unemployment during 2020. According to the U.S. Bureau of Labor Statistics, the unemployment rate surged to 13.0 percent in the second quarter of the year before easing to 6.7 percent in the fourth quarter. 

Need to Know: The American Rescue Plan waives federal income taxes on the first $10,200 of unemployment benefits received in 2020 by middle and lower income taxpayers. According to the U.S. Department of the Treasury, the tax relief extends to both workers who received benefits through federal unemployment programs as well as those who received traditional benefits through their state unemployment insurance fund. 

Work-From-Home Benefits

During the height of the pandemic, many employees were forced to work from home. Millions of Americans transitioned from offices to work stations set up at kitchen tables and in spare bedrooms. This initial disruption has transitioned into a more commonplace situation, leaving many taxpayers questioning if they can claim home office expenses on their tax returns. 

Need to Know: Pennsylvania Personal Income Tax law permits a taxpayer to claim certain unreimbursed employee business expenses, including a deduction for home office expenses. According to the Pennsylvania Department of Revenue, you may claim a deduction for home office expenses if your employer doesn’t provide a suitable work space or you cannot report to your normal space due to COVID-19. However, other qualifying questions determine your eligibility. These can be found at

It’s also wise to know the following before claiming a home office space:

You must gather and retain your annual taxes, utilities, insurance, mortgage interest, maintenance, etc. to claim the deduction.

You must file and pay the 6 percent tax on the utility expenses claimed as part of the home office deduction (there is an additional 1 percent tax if you live in Allegheny County and an additional 2 percent local tax if you live in Philadelphia).

Once a property is used for business, it retains that status indefinitely and gains on the business use must be reported. 

There is no longer a federal tax deduction allowed.
As a result, taxpayers should reevaluate if the Pennsylvania deduction is worth it for the next tax saved each year.
 In addition, there may also be tax due in a future year when the house is sold. 

Affordable Care Act

The Affordable Care Act, enacted in 2010, exists to provide affordable, quality health care and reduce growth in health care spending. If you qualify, health insurers can no longer refuse or drop coverage based on a person’s medical history or because of a pre-existing condition.

Need to Know: There are a few changes for 2021, says Bob Wagner, president of The Insurance Group in Gettysburg. “There really are three key points people need to know for the upcoming year,” he says. “They are: 

1. The 2022 annual enrollment period has been extended to January 15, 2022.

2. The increase in allowable income to get the tax credit remains at the 2021 level.

3. The availability and affordability of entering into the Affordable Care Act remains at a high level.”

For questions and to learn more about eligibility, Wagner suggests working with an agent who is certified with the Pennsylvania Insurance Exchange.

Be Prepared

As always, the most important advice is to be prepared. The items outlined in this guide are just some of the changes for the new year. To learn more about your specific situation, it’s best to reach out to an advisor certified in the state of Pennsylvania. 

Your Local Experts

Bob Wagner, CLTC

The Insurance Group

37 Rear N. Fourth St., Suite 1, Gettysburg


Cindy Fremont

Financial Advisor

Edward Jones

805 Baltimore St., Suite 287, Hanover


J. Scott Hill, MA, AIF®

Registered Representative/Investment Advisor

Hill Financial Solutions

18 Carlisle St., Suite 105, Gettysburg


Tyler Lerman

Financial Advisor

Smith Wealth Advisory Group of Janney Montgomery Scott LLC

2315 N. Susquehanna Trail, Suite A, York



About Author

Jennifer Mellace

Jennifer Mellace is a a published author, editor, and marketing guru. Jennifer lives in Frederick, Maryland, with her husband, two children, and three dogs. In her downtime, she enjoys trail running and hiking with her black lab, Bella.

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