The Lifetime Learning tax credit offers educational tax breaks for graduate school, vocational training and some other nontraditional educational expenses. Depending on your income, you could get a credit for 10 percent, 20 percent or 50 percent of up to $2000 in contributions to a retirement account.Īsk your tax advisor or financial planner about educational tax credits to see if you may qualify. The saver’s tax credit pays as much as $1000 per person to those low and middle-income earners who put money into a retirement account, tax advisors note. It is important to note that even if you owe no taxes, you may be entitled to the earned income credit in the form of a refund, according to the IRS. The income caps are up a small amount over 2020. The size of the credit will depend on income and family size. The popular earned income tax credit allows significant reductions for low and middle-income earners. However, if a teen earns more than $750 in wages, the standard deduction equals their total earned income plus $350, up to the standard deduction for a single person.Īs always, there are tax credits, including the earned income tax credit, the child tax credit, the saver’s credit and educational tax credits. It’s important to note too, that for joint filers, each spouse is entitled to those deductions.įor minor children who have to file an income tax return, the standard deduction of $1,000 will be the same this year. If you are 65 or older and blind, the standard deduction will double the applicable amount. They will get to add $1700, if single, and $1350, for those who are married. There are also additional deductions for those who are 65 or older or blind. Those with a head of household status, will have a $18,800 standard deduction. If you’re married and filing jointly, your deduction will be $25,100 in 2021. It’s not only easier, the amounts are higher now, for most filers making it the better choice, according to financial experts.įor those filing as a single taxpayer or married filing separately, the standard deduction is up $150, to $12,550. Taking the standard deduction will give most taxpayers a lower taxable income. The new year brings with it some tax changes from the IRS, but far fewer than we saw with the Tax Cuts and Jobs Act of 2017, say tax advisors.įrom higher education credits to contribution limits and income caps for retirement accounts, and exemptions from gift and estate taxes, there are some subtle differences in the tax code that could affect your return for 2021.
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