People who don’t normally file taxes—either because they have low incomes or because they aren’t generating income—should consider the benefits of filing a 2021 tax return. And it is that the declaration can help them claim a refundable tax credit or obtain an income tax refund.
1–Check if you can claim the Earned Income Tax Credit (EITC)
A worker who earned $57,414 or less last year could receive the EITC as a tax refund.. For tax year 2021, the tax return taxpayers file in 2022, the Earned Income Tax Credit ranges from $1,502 to $6,728, depending on your filing status and how many children you include on your return.
The law allows taxpayers to use their 2020 or 2021 earnings to figure their EITC. Taxpayers can choose the amount that gives them the largest credit and they can check their eligibility through the EITC Assistant on IRS.gov.
Taxpayers must file a tax return to claim the EITC. By law, the IRS can’t issue refunds to taxpayers claiming the EITC until mid-February.
2–Child tax credit or credit for other dependents
Taxpayers can claim the Child Tax Credit if they have a qualifying child under the age of 17. Other taxpayers may be eligible for the credit for other dependents. This includes people who have:
–Dependent children who were 17 years of age or older at the end of 2020
–Parents or other qualified dependents
3 – Education credits
There are two higher education credits that reduce the amount of tax someone owes on their tax return..
One is the American opportunity tax credit and the other is the Lifetime Learning Credit. The taxpayer, their spouse, or their dependent must have been a student enrolled at least half time during an academic period in order to qualify.
The taxpayer may be entitled to one of these credits, even if they do not owe taxes. The Form 8863, Educational Credits, is used to request the credit when filing the tax return.
4–Refund Recovery Credit
Individuals who did not qualify for a third Economic Impact Payment (stimulus check) or got less than the full amount may be eligible to claim the 2021 Refund Recovery Credit based on their 2021 tax year information.
If they meet the requirements, they will have to file the 2021 tax return even if they do not usually file it. The credit will reduce any tax due for 2021 or be included in the refund.
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eldiariony.com
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.