Make Those Kids Count
No one has children just for the tax breaks, but it’s a nice perk. In the past, parents could cash in on dependent children in two big ways: the personal exemption and the Child Tax Credit. Unfortunately, the Tax Cuts and Jobs Act of 2017 got rid of the personal exemption, which allowed taxpayers with families to deduct a generous $4,050 each for both parents and another $4,050 each for every dependent child under 19 years old, plus full-time students between 19 and 23 years old.
The good news is that the federal government significantly raised the value of the Child Tax Credit. For the 2021 tax year, children ages 5 and under qualify for a $3,600 credit and children 6 to 17 qualify for a $3,000 credit .
The Child Tax Credit is much more valuable than the personal exemption because it’s a credit, not a deduction. That means the full dollar value is subtracted from your final tax bill, not just your taxable income. Even better, it’s a refundable credit, meaning that if your credits are larger than your tax bill, you get to keep the change.
Calculating Your Aggregated Turnover
How much tax you pay as a business depends on your aggregated turnover. That’s why it’s important to understand the difference between turnover and aggregated turnover, and the factors to consider when making this calculation.
Aggregated turnover is your total annual turnover + the turnover of all other businesses you’re affiliated with. This includes businesses you’re a partner or board member of. This often means your aggregated turnover will be higher than you expect.
Here are some examples:
Aziz is a sole trader who also holds 10% of a construction company’s shares. His aggregated turnover is the turnover of his business and the construction company’s.
Sonali’s new book shop has operated only for 9 months in a tax period. When calculating her aggregated turnover, Sonali has to include an estimated income for those three months she wasn’t in business.
Lowana is an artist. Her friend Daku manages a local exhibition, and Lowana sells him a $1,000 worth of art for $900. This is a sale at non-arm’s length because she offered him a discount she normally wouldn’t have.
Further reading: 5 ways to reduce your taxes
If there are any other topics you’d like us to cover, let us know in the comments and we’ll be sure to get to it!
5 legal and proven ways to reduce your taxes
Trading names in Australia. Here’s a hint: you don’t need one.
I Havent Filed Taxes In A While How Can I Receive This Benefit
You may be eligible for Child Tax Credit payments even if you have not filed taxes recently. Not everyone is required to file taxes.
This year, Americans were only required to file taxes if they earned $24,800 as a married couple, $18,650 as a Head of Household, or $12,400 as a single filer. If you had total income in 2020 below those levels, you can sign up to receive monthly Child Tax Credit payments using simple tool for non-filers developed by the non-profit Code for America.
If you believe that your income in 2020 means you were required to file taxes, its not too late. In addition to missing out on monthly Child Tax Credit payments in 2021, a failure to file in 2020 could mean losing out on other tax benefits or a refund you were owed. For help filing a past due return, visit the IRS website.
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Can I Claim The Eitc Child Tax Credit And Child And Dependent Care Tax Credit
Provided you meet the qualifications for these tax credits, you can claim all three to the extent that you meet the requirements. Even if you don’t owe taxes for 2021, you should nevertheless file a tax return if you qualify for any of these tax credits because all three are refundableany credit amount that exceeds your tax liability is paid to you if claimed on your tax return.
Child And Dependent Care Tax Credit
The Child and Dependent Care Tax Credit is a credit that helps taxpayers cover the expenses of caring for a child who is age 12 or under as of the year’s end, a disabled spouse, or a qualified dependent while working or looking for work. The credit is a percentage of a taxpayer’s earned income and phases out for taxpayers with AGIs above $400,000. No credit is allowed at an AGI of $438,000 and higher.
For 2021, the ARPA generally increased the amount of the CDCTC and made it fully refundable.
The rate of the credit increased for low- and moderate-income workers but decreased for higher-income ones. The changes are the same for all taxpayers regardless of filing status. For workers with AGIs below $125,000, the percentage is 50% for AGIs between $125,000 and $183,000, the CDCTC phases out by one percentage point per $2000 above $125,000, until it reaches 20 % at AGI of $183,000. Between AGIs of $183,000 and $400,000, the percentage remains 20%. Above an AGI of $400,000, the CDCTC phases out by one percentage point per $2000 until it reaches 0% at an AGI of $438,000.
The 2021 enhancements to the CDCTC apply for one year only. Unless extended by Congress, the CDCTC for 2022 will be nonrefundable and revert to its prior rules: lower expense ceilings, a 35% rate for AGIs under $15,000, and a phaseout to 20% at an AGI of $43,000.
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These 13 Tax Breaks Can Save You Money
Tax Day is April 18. These deductions and credits can lower your tax bill — and may boost your refund.
Courtney Johnston is an editor for CNET Money, where she manages the team’s editorial calendar, and focuses on taxes, student debt and loans. Passionate about financial literacy and inclusion, she has prior experience as a freelance journalist covering investing, policy and real estate. A New Jersey native, she currently resides in Indianapolis, but continues to pine for East Coast pizza and bagels.
Your federal taxes are due on April 18. Yes, Monday. If you haven’t yet filed, there’s still time to take advantage of common tax deductions and credits to ensure you get the biggest refund possible. Don’t pay more than you’re required to — from the expanded child tax credit to student loan interest deductions, there are many tax breaks you might qualify for that reduce your tax bill or maximize your tax refund.
While the best tax software can help you find any eligible tax deductions and credits, it’s a good idea to go into your return already aware of the tax breaks you qualify for. Read on to learn about the 13 biggest tax deductions and credits for 2021 and their eligibility requirements.
Making Tax Refund Decisions
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A tax refund is a welcome bonus. Whether it is $300 or $3,000, the way you use that money can have a real impact on your personal and financial well-being. Want a new computer? Better car? Flat-screen TV? Those items are attractive. But it’s important to consider whether buying something you want versus something you need is a good decision in the long run.
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Casualty Disaster Or Theft Losses
You may be eligible to deduct casualty losses relating to your home, household items, and vehicles if the damage is due to a disaster declared by the president of the U.S. For example, residents of Kentucky and Ohio counties who suffered losses due to severe storms, straight-line winds, flooding, and tornadoes that hit their areas beginning Dec. 10, 2021, will be eligible for tax relief. The Internal Revenue Service posts information about specific federally declared disasters whose victims may receive tax relief on its website.
You can also claim deductions for personal and business theft losses. To qualify as a theft loss, the taking of your money or property must have been illegal under state law. Special rules apply for determining the deductible amount. Generally, the deduction must be adjusted for any insurance recovery or other reimbursements.
These are many other items for which taxpayers may claim a deduction if eligible. The IRS provides special requirements for some deductions. As a taxpayer, it’s in your best interest to refer to IRS publications to ensure you are eligible before claiming any of these items on your tax return.
How Much Can You Deduct
The amount of money that you can deduct on your taxes may not be equal to the total amount of your donations.
If you donate non-cash items, you can claim the fair market value of the items on your taxes.
If you donated a vehicle, your deduction depends on if the organization keeps the car or sells it at an auction. A Donors Guide to Vehicle Donation explains how your deduction is determined.
If you received a gift or ticket to an event, you can only deduct the amount that exceeds the value of the gift or ticket.
Note: Limits on cash and non-cash charitable donations have increased or been suspended. Learn more about charitable deductions in 2021.
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Tip : Get Your Taxes Done On Time
You need to submit your 2020 tax return by the April 15th, 2021 deadline. Paper returns must be postmarked by April 15th, and electronically filed returns have to be in by midnight in your time zone. If you need extra time, you can file an extension, which will give you until mid-October to file your taxes.
Invest In Tax Planning
Tax planning is one of the best ways to take advantage of all these deductions and get the maximum tax refund possible. Tax planning often starts at the very beginning of the year and takes into account how much money you’ll earn and how different expenses affect the total tax amount that you’ll owe. Planning also helps you evaluate different ways of using your money to buy needed, yet tax-deductible items or make other tax-reducing investments.
A tax-planning professional can play with the numbers in computer software to evaluate what changes you can make to lower the tax bill, therefore upping the refund.
Originally Published: Apr 3, 2019
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Have You Applied For The Canada Training Credit
The Canada training credit, is available if you paid eligible tuition or other fees for post-secondary courses you took during the year. In order to claim this credit, you have to be between 25 and 65, and have a Canada training limit. Your Canada training limit is based on the income reported on your return. The training limit for most Canadians who are eligible for this credit is now $500 for 2021 which is up from its previous limit of $250 in 2021. You can find your Canada training limit on your 2020 Notice of Assessment.
The Canada training credit is refundable, which means if your credit is higher than the amount of tax you owe, you get to keep the rest as a refund. This is different from the non-refundable tuition tax credit, which only reduces the amount of tax you owe.
You can claim your tuition tax credit and Canada training credit in the same year, but keep in mind, the Canada training credit reduces the tuition tax credit you can claim, transfer, or carryforward.
Claim The Earned Income Tax Credit
Working families, individuals, people who are self-employed and others who have moderate to low income may qualify for the Earned Income Tax Credit. The EITC decreases the amount of taxes owed and may qualify you for a tax refund. To qualify, you must:
- Have a valid Social Security number
- Be a U.S. citizen, a year-long resident alien or a non-resident alien married to an American citizen or resident alien filing jointly
- Have income from self-employment, from an employer or from working on a farm
- Not be claimed as a dependent or child of another person
- Be between the ages of 25 and 65, living in the U.S. for at least half the year
To receive the EITC you must file a tax return, even if you owe no taxes.
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Tips For Getting The Biggest Tax Refund
Tax refunds can feel like Christmas in springtime. With a sudden boost to your bank account, you can look forward to going on a shopping spree, paying down your debt or squirreling the refund away in savings. These days, you can even anticipate when your windfall will arrive by tracking the status of your refund with the Refund Status tool available from the IRS online.
For those receiving minimal refunds, the celebration can be less like real bubbly and more like club soda. But forget the pity party. These taxpayers may be receiving small refunds because they withheld less tax from each paycheck throughout the year. Instead of “loaning” the federal government a bigger chunk of their salary and waiting for April to get it back, they held on to more of their income to spend and invest as they pleased.
While you can’t control the fact that you have to pay taxes, you can control how big of a refund is in your future. So, if you rely on your annual tax refund as a way to save for big purchases, or you just love getting a big chunk of cash all at once, we’ve pulled together 10 tips for getting the biggest refund check possible.
Tip : Report All Income
You have to report all eligible income on your tax return. If you dont, you could get into serious trouble with the IRS if your returns are audited in the future. If the IRS discovers unreported income, youll have to pay interest and penaltiesand that can amount to a lot of money.
Before you file your return, consider all your sources of income for 2020. Include things like:
- Income from contract work
- Interest on your savings account
- Dividend payments
You might want to use a spreadsheet to keep up. It might seem old school, but spreadsheets can help you stay on top of small amounts of 1099-related income throughout the year.
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Do I Qualify For Eitc
You qualify for EITC if:
- You have earned income and adjusted gross income within certain limits AND
- You meet certain basic rules AND
- Meet the rules for those without a qualifying child OR
- Have a child who meets all the qualifying rules for you or your spouse if you file a joint return.
EITC has special rules for:
- The amount of credit you may receive
Be Smart About Your Tax Refund
Getting a tax refund really means you paid too much money to the IRS through withholding and other payments. Even so, you should still always try to get as big of a refund as possible — as long as you do so by looking for savvy ways to cut your overall tax bill.
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Student Loan Interest Paid By You Or Someone Else
In the past, if parents or someone else paid back a student loan incurred by a student, no one got a tax break. To get a deduction, the law said that you had to be both liable for the debt and actually pay it yourself. But now theres an exception. You may know that you might be eligible to take a deduction but even if someone else pays back the loan, the IRS treats it as though they gave you the money, and you then paid the debt. So, a student whos not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by you or by someone else.
How To Get A Bigger Tax Refund From The Irs In 2021
- The IRS has updated its withholding estimator tool. It now tells you how to adjust the income taxes withheld from your pay to get a higher or lower refund.
- While its too late to change for the 2019 tax year, now is the best time to right the ship for 2020.
- Use your 2018 tax return, along with your latest paystub, to fine-tune your 2020 withholding.
It’s about to get a little easier for you to figure out how to break even or get a bigger tax refund from Uncle Sam.
The IRS kicked off the new year with a revamp of its tax withholding estimator tool, a calculator that helps you fine-tune the amount of federal income taxes that are pulled from your paycheck.
Tax withholding is a balancing act. If you withhold too little, you will wind up owing the IRS when you file your taxes.
Overpay your taxes, and you’ll get a heftier refund. The downside is your take-home pay will go down.
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This latest round of updates to the IRS withholding tool allows users to plug in their pay information and find out how much they may owe or get back in the 2020 tax year.
This is for the return you’ll be filing in April, 2021.
An interactive slider on the calculator allows you to tweak your expected refund or lower your expected bill in increments of $250, and gives you directions on how to adjust your withholding as well as that of your spouse to get the desired amount back.
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