It’s tax day! Don’t Make These 4 Mistakes When You Deposit
April 18 is upon us and, ready or not, it’s time to file your 2021 tax returns if you haven’t already. According to data from the Internal Revenue Service (IRS), one-third of Americans wait until the last minute to file their tax returns, with many wading through tax confusion as the deadline approaches.
This year’s deadline, which was pushed back to April 18 due to Washington DC-area Emancipation Day, which recognizes the day Abraham Lincoln abolished slavery in the nation’s capital, is the most old for several years. In 2019, the deadline, which is usually April 15, was extended to July. And last year, the IRS pushed the deadline back to mid-May due to pandemic-related tax concerns.
This year, many last-minute filers were expecting another deadline extension, while others were postponing what they assumed was an inevitable tax bill, and still others were honestly confused about many aspects of this confusing fiscal year.
If you’re one of the millions of filers who don’t know what’s going on with your 2021 income tax, here’s what to know.
How do I claim the child tax credit?
As part of the US bailout, parents received advance payments from the popular Child Tax Credit (CTC). The monthly checks, which totaled up to $3,600 per child, accounted for only a portion of the CTC, the rest to claim at tax time.
To claim this credit, filers must confirm that they are eligible based on income level and number of dependents, and compare the payment amount shown on IRS letter 6419. The IRS will determine the remainder of the credit owing. to filers and use it to reduce your gross income on a dollar-for-dollar basis.
The CLC is not one deduction. IThis is a credit, which means your taxable income will be reduced. This may result in a higher tax refund, but does not guarantee one.
How do I apply for a recovery rebate credit?
Like the CTC, the Salvage Rebate Credit (RRC) is a credit on your taxable income. This reduces the amount of income you are taxed on a dollar-for-dollar basis, and it may result in a higher refund or a lower tax bill. The 2021 RRC is available to filers who have not received the full amount of the third economic stimulus payment, which was distributed in 2021.
To determine if you are eligible for RRC, check your IRS online account or refer to IRS letter 6475, which contains information about your stimulus check totals. If you did not receive the full amount in 2021, you qualify and can claim it this year. If you have not received the full amount of the first or second stimulus payment, you must amend your 2020 tax return and resubmit it.
How can I claim the earned income tax credit?
the Earned Income Tax Credit (EITC) is a credit intended to reduce the taxable income of low- and middle-income tax filers. According to the IRS, you may qualify for the EITC if:
- Have worked and earned less than $57,414
- Have less than $10,000 of investment income for the 2021 tax year
- Have a valid social security number
- Was a U.S. citizen or resident alien for the full year
- Do not file Form 2555, which deals with income earned abroad
How do I claim the child and dependent care credit?
The Child and Dependent Care Credit (CDCC) is a tax credit designed to help offset the costs incurred by families paying for child care or caring for an adult at charge. This year, the CDCC has been increased to $8,000, a significant increase from the $2,100 in previous years.
For qualify for the CDCCfamilies should:
- Have an eligible dependent
- Having incurred child care expenses while working or looking for work
- File a joint tax return with your spouse, unless you are legally separated
- Earned less than $438,000 in 2021
How do I submit an extension request?
If you waited until the last minute and your return is complicated, you should consider filing a extension with the IRS to get an additional six months to file. Extensions are free and carry no penalty.
To request an extension, complete Form 4868 before midnight. Although extensions are free and do not incur penalties, you should still pay your taxes on time if you have to.