Tax credits can decrease the amount you owe and potentially increase your refund (The last Which contains some significant changes to existing tax credits. And if you still miss a first or second stimulus check, you can also —
Here are some of the tax credits you can claim on your taxes this year that you may not be aware of.
If you have not received all of your Incentive Money: Recovery Discount Credit
While most people got their first and second stimulus controls automatically, some didn’t because ofor their status as (often including those who are or part of the If you have not received the full amount you owed from the ) or the ), or missed money for one of your family members, you can claim that money on your 2020 tax return. You must submit a declaration to receive this credit,
If you earn below a certain amount: earned income tax credit
Designed to benefit lower-income people, the Earned Income Tax Credit can lower your taxable income and wages. Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, part of theyou can use your earned income for 2019 or 2020 to calculate your 2020 tax credit – a potentially important provision for people who lost their jobs during the pandemic.
Keep in mind that if you claim this credit, the IRS may ask for additional information, which could delay your refund.
If you have children: tax credit for children
Theaims to benefit working families by enabling them to claim a repayable credit per eligible child. Below the , the amount you can claim has increased: Instead of the previous $ 2,000 per child, you can now claim $ 3,600 per child under 6 years old and $ 3,000 for children over 6 years old. The money of the credit is split and half is paid through your tax refund, and the other half is paid monthly from July to December.
You can use this IRS tool to determine if your child or dependent is eligible for the credit. As with the earned income tax credit, claiming this credit may prompt a request for additional information, which may delay your repayment.
If you pay for childcare: Tax credit for childcare
To make childcare more affordable, the new incentive law provides for a childcare tax credit for children under age 13 – up to a maximum of $ 4,000 for one child, or $ 8,000 for two or more children. The credit is refundable and is available to families making less than $ 125,000 per year. Those making between $ 125,000 and $ 400,000 would receive partial credit. Read more from the IRS here.
If you contributed to our IRA or retirement plan: Saver’s Credit
If you’ve made eligible contributions to an IRA or employer-sponsored retirement plan, you may be able to claim a savings credit. To do this, you must be 18 or older, not be claimed as dependent on someone else’s return, and not be a student. The amount you can claim depends on your, and will be part of the contributions you have made. The maximum credit you can claim is $ 1,000 (or $ 2,000 if you are married together). The IRS has a chart that you can use to calculate your credit.
If you are over 65 or have a disability: credit for the elderly or disabled
Those aged 65 and older or who are retired for permanent and total disability who received taxable disability income during the year and are below a certain income threshold may qualify for this tax credit ranging from $ 3,750 to $ 7,500. Use this IRS tool to find out if you qualify for the elderly or disabled credit.
If you have paid tax in another country: Foreign tax credit
This one can get complicated, but in general, if you’ve paid income tax in another country or in a US territory, you may be able to deduct it from your US tax return. The IRS breaks down all the rules for the foreign tax credit here.
If you’re wondering about the various tax deductions you might qualify for, check out our story at, and why you may not be able to claim the home office deduction even if you now work remotely. Plus, find out , and
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