Earn the Maximum Tax Refund With These Two Tips for Your 2021 Filing
When it comes to filing your tax return, any potential saving tips are welcome. While some tax tricksters spend an inordinate amount of time finding hidden loopholes to save some precious pennies, there are a couple of tips available to all taxpayers in plain sight. For 2021, a charitable tax credit of $300 is available, and the Child Tax Credit is fully refundable for parents.
1. Charitable Donation Rule
The IRS has created a special tax rule for 2021 filing that allows Americans to deduct certain charitable donations on their taxes, lowering their tax liability and translating them into savings. Single filers can deduct up to $300 and married couples that file jointly can deduct up to $600. As a bonus, you don’t even have to itemize your taxes to claim it.
Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress in March 2020, a loosening of charitable restrictions has given a special opportunity to households who would normally take the standard deduction when they do their taxes.
Remember, these contributions made in 2021 must have been to qualifying charities. Money given to any cause or non-profit organization is always worthwhile, but only donations to registered charities qualify for an income tax credit.
2. Child Tax Credit
In 2021, the American Rescue Plan Act (ARP) expanded the Child Tax Credit significantly for one year, making it the largest U.S. child tax credit ever and providing most working families with $3,000 per child under 18 years of age and $3,600 per child 6 and younger.
The ARP also made the credit fully refundable and provided tax credit options for families to take half the credit in six monthly payments. On July 15, 2021, 39 million households — providing for 88% of children in the United States — automatically began receiving payments of between $250 and $300 if they had chosen to. Regardless of if you did or didn’t take half the credit starting in July, you must claim it on your taxes to get the full refund or the rest that you are owed.
More From GOBankingRates
- I'm a Self-Made Millionaire: These Are the 6 Investments Everyone Should Make During an Economic Downturn
- The Average Retirement Age in 2023 in the US vs Canada
- 3 Things You Must Do When Your Savings Reach $50,000
- Don't Make These Common Mistakes If You Want to Retire Wealthy
