The tax season begins on Monday, January 24, but this year, thanks to several tax exemptions implemented temporarily by the US rescue plan, taxpayers could see larger reimbursements, or in some cases, smaller payments than expected.
After accounting for annual income, deductions are the first tax exemption you must calculate.The Federal Tax Law allows you to deduce several personal expenses of your income subject to taxes, which can make a huge difference for your pocket, since the amount of income subject to tax is reduced.
However, not all expenses meet the criteria for tax savings.The internal income code is very clear about what expenses you can deduce and how to claim them.
Telemundo 47 then explains how to take advantage of those deductions.
Standard deductions
Here your marital status comes into play.Read our single article, married or head of family: What marital status pays less taxes?For more details about how your status affects your tax declaration.
IRS policies offer those who do not detail deductible expenses the possibility of claiming standard deduction, for which the government sets a specific amount every year for each marital status.
For example, in 2021 Uncle Sam authorized a standard deduction of $ 12,550 for single taxpayers, $ 18,800 for those who present the statement as heads of family and $ 25,100 for married couples who present a joint statement.
Therefore, if you declare as head of the family who won $ 64,000 per year, the standard deduction will reduce your income subject to taxes to $ 51,450.However, this amount is subject to a greater reduction for the other allowed deductions you claim.
Suppose you donated to charity.In that case your generosity would be rewarded with fiscal savings.You can deduce up to $ 300 in charitable contributions made in cash by tax declaration if you claim the standard deduction.But that amount will be up to $ 600 for tax declaration for the married ones that present together and $ 300 for the other tax civil states.
Deductions on the line
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The IRS bases individual tax declarations on the calculation of adjusted gross income (AGI, for the acronym in English) before establishing the final amount of income subject to tax.
It sounds complicated, isn't it?Well, to understand it better, the taxpayer must know that the adjustment or deduction of the interest of student loans, for example, allows you to deduce the interest paid by student loans as long as certain specific requirements of the deduction are met.The same goes for payments for medical insurance for self -employed workers, which are deductible regardless of your AGI.
Deductions under the line
These deductions reduce your adjusted gross income, and refer to the expenses detailed in annex to attached to your personal income tax declaration.Some common detailed deductions include medical expenses and charitable donations, for example.
The medical expenses that you can deduce only include the part that exceeds 7.5 percent of your adjusted gross income for 2021. Taxpayers who choose to detail their deductions will not be able to claim the standard deduction.
The majority of taxpayers choose the standard deduction since the 2018 tax reform suspended, limited or eliminated several detailed deductions.
Tax savings
Now that it is better understood what the deductions are and how to claim them based on the IRS policies, here we give you some examples of how to obtain tax savings.
Interest of student loans.Most taxpayers can deduce interest paid in federal and private student loans.You can deduce up to $ 2,500 in interest paid during the year, provided that your total income by 2021 is less than $ 85,000 ($ 170,000 if you are married and present a joint statement) and the loan was for your education or that of your spouse or dependent.This deduction is also an adjustment, so you don't have to detail to claim it.
Mortgage interests and real estate taxes.If you own a house, you can deduce mortgage interests and real estate taxes.However, after the approval of the 2018 tax reform, your deduction combined for mortgage interests and real estate taxes for the year cannot exceed $ 10,000.You have to detail to claim this deduction.
IRA contributions.If you do not have access to a retirement plan through your work or you have not opened a SEP (simplified employer pension) or other retirement accounts through your own business, you can start an individual retirement arrangement (anger).The contribution limit for 2021 is $ 6,000 ($ 7,000 if you are 50 years old or more).You can only claim this adjustment if it contributes to a traditional anger, not to a Roth anger.
Charitable donations.If you detail, you can deduce charitable donations, such as cash donations and credit card to places of worship, non -profit organizations, civic organizations and educational institutions.You can also deduce non -monetary donations and expenses related to voluntary work.
Medical and dental expenses.If you detail, you can deduce a part of your medical and dental expenses of the year.This includes prescription medications, insulin, supplies and medical devices, medical and dental insurance premiums, trips related to medical care and fees of doctors, hospitals and laboratories.Your deduction is limited to the amount that exceeds 10 % of your adjusted gross income, which is based on your income after the adjustments for those you qualify.
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Food pension payments.If you have to make food pension payments as a divorce condition or maintenance agreement separately, you can deduce these payments (taxable income for the beneficiary).If these payments include amounts for childhood support, child support "is priority" and is not deductible when calculating food pension payments.
Cancellation of uncollectible debts.If you lent someone money and did not return it, you may have a deduction for uncollectible debts.Having an agreement in writing with the borrower helps to prove your case that money was a loan and not a gift, along with the proof that you made efforts to recover the money, but there is little or no possibility that the borrower pays you(such as death or bankruptcy).Deductions for uncollectible debts are treated as a loss of capital, so it is limited to deducting $ 3,000 per year of the default balance.
Deduction of qualified commercial income (QBI).The QBI deduction is a new deduction created by the 2018 fiscal reform that allows you to deduce up to 20% of your own work profits.The deduction is based on your gain in relation to your total taxable income, which cannot exceed $ 157,500 ($ 315,000 if you are married that presents a joint statement).It is a deduction below the line that comes after your standard or detailed deduction, and any person who has their own work income who qualifies for the deduction can take it.There are fewer limitations if your income is below the previous amounts.
Medical and dental insurance premiums for self -employed workers.Autonomous workers can deduce their medical and dental insurance premiums without breaking down.This is available as an adjustment if you have work income on your own and you do not receive employer -based health coverage.Many people, including tax software developers, often overlook the dental part, so be sure to include it if you qualify.
Registration and rates.You can deduce up to $ 4,000 of qualified registration and related rates in accredited institutions as adjustment if the expenses went to you, your spouse or dependents.Fiscal credits for education are usually more beneficial than this deduction, but it is an option if you are already claiming credit for another student or if you do not meet the criteria for credit.
Tax credits
Most generous tax credit for the care of children and dependents
If you work or attend school while paying for the care of a child under 13 or other family member with disabilities that cannot take care of yourself, you are likely to benefit from temporary increases to credit by credit byCare of children and dependents.
The credit is based on your income and is calculated as a percentage of the qualified expenses in which you incur, which this year is 50 %, compared to 35 % of the previous years, although that percentage is reduced for those who earn moreof $ 125,000.
The expenses that qualify are less the benefits of dependent care provided by the employer (for example, the money you deposit in a flexible expenses account with tax advantages).
However, this year's credit could reduce your tax bill, or increase your reimbursement, up to $ 4,000 for a U $ 8,000 dependent for two or more.Before 2021, the credit would hardly have given you $ 1,050 or $ 2,100, respectively.
Temporary Expansion of Tax Credit by children
The maximum value of the tax credit for children is $ 3,000 per child from 6 to 17 years and $ 3,600 per child of 5 years or less.
Unlike previous years, credit is totally reimbursable by 2021, which means that you can obtain the maximum amount of credit even if you exceed your federal tax obligation on income for the year.
And for the first time, the IRS made monthly payments advanced from that credit, from July to December.Therefore, it is possible that you have already received approximately half of your credit and you can claim the other half in your statement from January 24.
To help with that calculation, the IRS will send you the notice 6419, which details the amount you already received and how much more owes you.
But the amount can be different from what you expect.And this is because advanced payments were calculated based on your income and family situation of 2020 or 2019. But the final calculation will be based on its 2021 information, which can change the amount for which you meet the criteria.
For example, if you had another child in 2021, you may be entitled to more than your advanced payments reflect.
Or they may have paid you too much if, for example, you are divorced and you changed which father could claim a child in your tax declaration.The same could be if you won more money in 2021 or if one of your children turned 18.Whether you have to return the excess you obtained, which probably means that you only claim less credit for the first half of the last year - it depends on your income.
Those who win less than $ 40,000 ($ 60,000 if they are married) obtain total payment protection.But if he earns more than $ 80,000 (or $ 120,000 if he is married), he may have to pay.The IRS explains more here.
Recovery reimbursement credit
Since the pandemic began, the IRS has sent three rounds of economic impact payments to the Americans, the last of which came out in 2021.
If you received that third payment, the IRS will send you the notice 6475, which details how much they paid you.You must report that information in your statement.
But if you did not receive the third payment, or maybe now you qualify for more than they paid you because your income or your family situation changed, you must check if you want to claim the refund recovery reimbursement credit.
"People who did not qualify for a third economic impact payment or who obtained less than the total amount can claim the 2021 recovery reimbursement depending on their fiscal year information 2021," the IRS said.
If you received a stimulus payment but your 2021 income would have disqualified you, there is good news: you do not need to reimburse the third stimulus payment, which was based on your 2019 or 2020 income, if your income from 2021 disqualifies you from all or partof payment.
Tax credit for job income
Only by 2021, low and moderate income taxpayers who do not have qualified children can qualify for a tax credit for the entry of the largest work.
The American rescue plan almost tripled the maximum available credit at $ 1,502.
To qualify, your job income by 2021 must be less than $ 21,430 ($ 27,380 if you are married and present a joint statement).And permanently for all EITC beneficiaries, the amount of investment income that you can have in addition to their salaries and still claim credit increased to $ 10,000.
The credit is also first available for workers without children up to 19 years and workers 65 years or older.
For people who have qualified children, if they earn $ 57,414 or less, they can qualify for the EITC.And depending on how many children they have, they could obtain a maximum loan of $ 6,728.
Read our article beyond children's credit: other tax incentives that you can claim in 2022 for more details on the available tax credits.
For updated information about the tax season 2022 Visit our special section financial aid and benefits.