Tax season has officially started, and as you prepare, don’t overlook tax deductions and credits you might be able to claim. With all of the changes to tax laws in 2021, navigating all of the new deductions and credits can be a challenge. For example, there was an expansion of the, an extension of the charitable contributions deduction and forgiven student loans are now tax-free through 2025. With so many updates and new tax laws, it’s hard to keep track.
To help, we’ve rounded up 13 of the most valuable tax deductions for most filers. These deductions are primarily for those who are not self-employed — a group with its own, largely separate, set of. We’ll keep this list updated as we receive new information on the 2021 tax year from the IRS.
Note that a tax year refers to the 12-month period that a tax return covers, usually from Jan. 1 to Dec. 31 in the US, and includes taxes owed on earnings during that period. A tax season is the period, generally between Jan. 1 (Jan. 24 this year) and April 15, when taxpayers prepare financial reports for the previous year and submit their tax returns. That means taxes for earnings during the 2021 tax year would be included on a 2021 tax return that the IRS sends to taxpayers in the 2022 tax season.
1. Child tax credit
The new child tax credit was made fully refundable in 2021 and increased to up to $3,600 per year per child through age 5, and up to $3,000 per year for children ages 6 to 17. (Parents of newborns born in 2021 can also claim this credit in 2022.) Eligible families automatically received half the total of the payments in advance monthly installments in July through December 2021, unless they unenrolled. When families file their taxes in 2022, they’ll get the remainder of the benefit they didn’t get through the 2021 advance monthly installments. Even if a parent makes little to no income, they are still eligible for the expanded child tax credit, but payment amounts do phase out with higher incomes.
Dependents who are 18 years old can qualify for $500 each. Dependents between the ages of 19 and 24 may qualify as well, but they must be enrolled in college full time.
Eligible dependents include:
- Foster child
- Adopted child
If you received advance payments for the child tax credit this year, you won’t be able to claim the full deduction at tax time. The IRS will send you Letter 6419 in January 2022 to let you know how much you received in advance child tax credit disbursements and how much you have left to claim. If you opted out of advance payments, you’re eligible for the full amount of the credit. If you’re not sure where you stand with this credit, you can review more at the Child Tax Credit Update Portal on the IRS website….Read more>>