People who do not normally file taxes –either because they have low income or because they are not generating income– should consider the benefits of filing a tax return of 2021. 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 2020, the tax return that taxpayers file in 2022, the Earned Income Tax Credit ranges from $1,502 to $6,728, depending on your marital status and how many children you include on your return.
The law allows taxpayers to use their income from 2020 or 2021 to calculate your EITC. Taxpayers can choose the amount that gives them the largest credit and 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 cannot issue refunds to taxpayers claiming the EITC until mid-February.
2–Child Tax Credit or Child Tax Credit 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 had 17 years or more by the end of 2020
–Parents or other qualified persons who are at your expense
3–Credits for education
There are two credits for higher education that reduce the amount of tax someone owes on their tax return.
One is the American Opportunity Tax Credit and the other is the Credit for lifelong learning. 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 he does not owe taxes. 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 obtained less than the full amount, they may be eligible to claim the Refund Recovery Credit from 2021 which will be based on their tax year information 2021.
If they meet the requirements, they will have to file the tax return of 2021 although they do not usually present it. The credit will reduce any tax due for 2022 or be included in the refund.