Well in an interesting turn of events, the IRS has expanded all sorts of tax credits to people who file their 2021 tax returns. Even though the IRS is 6million returns behind in processing 2020 tax returns, they are inviting more Americans to file for 2021 with expanded benefits. Hmnnn, are the benefits enough to get non filers to file? We shall see.
Some of the expanded benefits include:
- An expanded Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
- An increased Child and Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
- A more generous Earned Income Tax Credit: The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children.
- The Recovery Rebate Credit: Those who missed out on last year’s third-round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
- A deduction for gifts to charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.
These benefits are also available to those of us who file timely and accurate tax returns also!
Do you need help understanding your filing requirements? We are happy to help!
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