Coronavirus Pandemic Causing Potential Tax Crisis For Many In 2021

Americans struggling to dig themselves out of the hole 2020 left in their financials may have another financial crisis to deal with in 2021: their looming 2020 tax bill.

Millions of Americans in 2020 had to take unemployment benefits, withdraw from their retirement accounts or sell stock to get by in 2020. All of these actions lead to hefty tax consequences that will be due in 2021. Not to mention those Americans who still have not been able to pay their 2019 taxes.

This larger tax bill could result in a financial crisis for millions when the 2020 tax bill is due, as they still struggle financially day to day in the new year.

According to a recent LendEDU survey, 53% of adult Americans are worried about going into tax debt next year (2021) due to the coronavirus and its economic impacts, including 76% of those who have been laid off due to the pandemic.

Of these respondents, the tax bill worries range: 70% are worried they may owe more due to receiving unemployment benefits, while 78% are worried due to drawing funds from a retirement account to stay afloat (including 86% of those laid off), and 72% are worried due to selling stocks to stay afloat (including 79% of those laid off).