However, it may make sense to file one anyway, even if you do not need it technically. This is because the Internal Revenue Service may owe you cash, especially if you have dependents. It could come from two sources: recovering taxes for which you have already overpaid or claiming tax credits to which you are entitled, including money from the third stimulus check, if you have not already received it. The first is tax refunds that you do not actually owe: Single taxpayers under the age of 65 who earn less than $ 12,550 do not have to pay income tax on their earnings, nor do notifiers under the age of 65 who earn less than $ 25,100 $. But if you did less than that in 2021 and the taxes were withheld by an employer – say, for a full-time job you held for a few months in 2021 – you may owe a refund. Refundable tax rebates can also be extremely valuable for people who do not normally file a tax return, as they can be paid in cash, even if you owe nothing in taxes. Non-refundable loans and other deductions, on the other hand, can only be used to reduce the amount of taxes you owe. Here are six commonly needed credits that can be repaid in 2021.
1. Income tax credit obtained
The EITC is a repayable tax credit of up to $ 6,728 for low- and middle-income workers. The amount of credit is based on how many children you claim – up to three or more – although you can still apply if you do not have children. In case no eligible children are claimed, the payment is $ 1,502. To receive this credit, your eligible adjusted gross income (AGI) must be below certain limits, based on the number of children you qualify for. But you do not have to worry about that if you do not earn enough to justify a tax return. Your AGI is low enough to qualify for full credit, whether you have children or not. There are other eligibility requirements, but your best bet is to use the IRS EITC Assistant to determine if you qualify. The claim for this credit is submitted to your tax return using the EIC Program.
2. The child tax credit
The CTC is an annual tax deduction available to taxpayers with children. The American Rescue Plan made the loan fully repayable for fiscal year 2021 and increased the maximum amount from $ 2,000 to $ 3,600 for eligible children under 6 and $ 3,000 for children under 18. For fiscal year 2021, you receive full credit per child if your AGI is less than $ 75,000 for individual users, $ 112,500 for heads of household and $ 150,000 for married co-submitters. The amount of credit is gradually being phased out beyond these AGI limits, stopping altogether at $ 220,000 and $ 440,000, for individual and joint archivists, respectively. This credit is unusual as most eligible taxpayers have already received half the credit as a monthly down payment, which is sent from July to December 2021. The other half of this amount – or the full amount, if you have never received it. Monthly payments – can be claimed using Schedule 8812 in your 2021 federal tax return.
3. The recovery discount credit for missing stimulus check payments
As part of the pandemic-related financial incentive bills, most Americans received three stimulus checks, known as financial impact payments, in 2020 and 2021. The third payment was up to $ 1,400 per adult, plus $ 1,400 per child or adult. which depends. The first two checks can no longer be claimed, but if you did not receive the third in 2021 or owe you more than you received, you can claim the funds as a “Recovery Discount Credit” in your 2021 federal tax return. While some income requirements apply, you are entitled to the full amount if you earned less than $ 75,000 as a single file or $ 150,000 as a joint archivist. For more on how to calculate the rebate and how to claim it, see this IRS website.
4. The credit of child and dependent care
This appropriation covers some of the costs associated with caring for a child or child with a disability, including after-school, daycare or daycare programs, if that care allowed you to work.
The American Rescue Plan made this credit fully repayable only in 2021. The maximum eligible cost for this credit is $ 8,000 for an eligible individual and $ 16,000 for two or more.
The exact amount of credit you can qualify for depends on a number of factors, including income. Use this IRS tool to find out what owes you. The claim for this credit is made using Form 2441.
5. US Bargain Credit
This credit covers up to $ 2,500 for certified college expenses and is partially repayable. If the credit is zeroing the amount of tax you owe, you can get back 40% of the remaining credit amount, up to $ 1,000. To be eligible for the AOTC, students must have completed the first four years of higher education and be enrolled at least at half-time at some point during the tax year. To claim AOTC, you must file a federal tax return with a completed Form 8863 attached to your Form 1040 or Form 1040A.
