2022 will be a special year for filing IRS tax returns because the pandemic made new tax breaks available. Because of these tax breaks, low-income persons who weren’t required to file tax returns before will want to file returns now for the tax year 2021.
You need to file a 2021 federal income tax return to take advantage of key tax benefits included in the American Rescue Plan and other recent legislation.
Even if you have little or no income from a job, business, or other sources you may be able to take advantage of these laws. Claiming these benefits could put money in your pocket.
These 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.
If you have any questions talk to a tax professional. The IRS provides free assistance especially for low-income Americans and there are now expanded help times on Saturdays.
And if you have a tax problem, Legal Tax Defense will give you a free consultation. Call now to speak to a tax attorney. It’s free and we can help you with tax audits, garnishments, and filing back taxes to get the refunds you are due.
Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.