Tax season is currently upon us, which means its time to do your civic duty and start filing your income tax to the federal government through the IRS. While the tax season can often be a time of heightened anxiety for filers, especially if it is your first time filing, it is important to bear in mind that you may not owe as much tax as you think you do. If you qualify for tax credits, your total amount owed to the IRS can be significantly reduced
Tax credits: You may not owe as much as you think
For most Americans, filing your taxes is a straightforward procedure. If you are an employee, you generally only need to submit a W-2 form. Your employer is required to submit a W-2 form on your behalf, which is proof of what you income is. However, these forms only form part of the bigger picture when it comes to filing your taxes. You still need to submit a copy of the form, even if you do not qualify to pay tax. This is because when claiming back from the IRS, you need to show proof of your income in order to show which tax credits you qualify for.
While filing for tax credits does take more work, it can save you thousands of dollars if you do your research and know what you qualify for. While most tax credits are fairly well known, such as the Child Tax Credit, there are many others you could qualify for. This is because tax credits are generally intended to help low- and middle- income filers, so the income requirements generally fall into similar brackets.
Apply for the Earned Income Tax credit
Heading into March, and the deadline for filing your taxes fast approaching, you can apply for the Earned Income Tax Credit. This credit is often overlooked compared to others, as one in five tax payers do not claim this credit. To qualify, you must meet the following criteria:
If you file as single, head of household or widower, your income must not exceed the following limits:
- $19,104 with no qualifying children.
- $50,434 with one child.
- $57,310 with two children.
- $61,555 with three or more children
If you file as a married couple filing jointly, your income must not exceed:
- $26,214 with no qualifying children.
- $57,554 with one child.
- $64,430 with two children.
- $68,675 with three or more children.
The amount of credit you can claim back is determined by the number of children you have:
- A family without qualified children: $649
- If you have 1 qualifying child: $4,328
- If you have 2 qualified children: $7,152
- If you have three or more qualifying children: $8,046
File your taxes by this date
The deadline to file your taxes is April 15. However, you have up to three years to file for the Earned Income Tax Credit from prior years. This means that you technically only need to file for the Earned Income Tax Credit for 2021 by April 15 this year. However, to streamline the process, you should file for last year’s one if you have not done so. You can also apply for an extension for the April 15 deadline.
Always consult a tax professional if you are unsure of anything when it comes to filing your taxes, and claiming any credits you may be eligible for. The IRS also provides free tax prep if you meet the following criteria:
- Earn $67,000 or less
- Have a disability
- Need language support
- Are 60 years or older
However, filers are welcome to consult the IRS website which provides detailed resources and guidelines on how to file your taxes. You can also monitor your tax refund status through their online tool “Where’s my Refund?”.
