While 2020 was the year when COVID-19 hit home, 2021 is expected to be the year when the economy and everyday life returns to normal, more or less. That should bring more jobs, higher incomes and less financial stress generally. But the new year also will mark a time when millions of Americans continue to grapple with the financial fallout from the pandemic, the Arizona Republic reported. Improvement won't come overnight, and some problems — tax payments, debts and saving deficits — could get worse before they get better. Some 53% of Americans said they were worried about tax debt in 2021 including 76% who lost work during the pandemic, according to a survey released in December by LendEDU. Top reasons for concern included taxable withdrawals from retirement plans, taxes that resulted from selling stocks or other assets, and taxes on jobless benefits. About 10% of respondents said they weren’t able to file and pay all of their 2019 tax obligations by the extended July 15, 2020, deadline. A wave of bankruptcy filings did not happen in 2020, thanks largely to expanded jobless benefits, stimulus payments, Paycheck Protection Program business loans, foreclosure moratoriums, landlord forbearance and other help. In fact, consumer bankruptcy filings last year ebbed to their lowest level since 1987, according to the American Bankruptcy Institute. Total filings, including for businesses, fell 30 percent last year. Many consumers and businesses have been "sitting on the edge," waiting to see if conditions improve this year before they file for bankruptcy, said Amy Quackenboss, executive director of the American Bankruptcy Institute. "They're waiting to see if things get back to normal." Some individuals might dig out of their holes, especially if jobs return big time to industries such as lodging and restaurants as the economy recovers and lockdowns ease. But many businesses, already suffering, might not make it, which could lead to permanent job losses, Quackenboss said. Business bankruptcies already are rising. Quackenboss said she expects consumer filings also will increase, at least back to 2019 levels, in the coming year. However, she added that it's difficult to predict the timing as so much depends on efforts to suppress the virus and the length that federal and other assistance programs stay in place.
