Optima Tax Relief Reminds Filers of 2021 Tax Benefits

As costs are rising for just about every commodity or service in the U.S, the IRS continues to remind taxpayers to take advantage of tax benefits that they may be eligible for. Optima Tax Relief reviews these benefits for the 2021 tax year.

Earned Income Tax Credit

Taxpayers with low- and moderate-level incomes and investment incomes of $10,000 or less can qualify for the EITC. The credit amount ranges from $1,500 to nearly $7,000 but can differ depending on if a taxpayer has children, dependents, or meet other criteria.

Child Tax Credit

Families can claim a credit of $3,600 for children ages 5 and under, and $3,000 for children ages 6-17 for the 2021 tax year.

Child and Dependent Care Credit

Taxpayers can claim this credit if they paid expenses to care for a qualifying individual so they can work or look for work. A qualifying individual is either a dependent under the age of 13, a dependent or spouse incapable of caring for themselves. They must also live with the taxpayer for more than half the tax year. The credit is paid in the amount of $4,000 for one qualifying person and $8,000 for two or more qualifying persons.

Recovery Rebate Credit (RRC)

Taxpayers may be eligible for the RRC if they did not claim the third stimulus check in 2021.

Deduction for gifts to charity

The deduction amount for gifts to charity depends on if a taxpayer takes the standard deduction or if they itemize deductions. If a single filer takes the standard deduction, they can deduct up to $300 in donations and joint filers can deduct up to $600. Itemizers can deduct the full amount donated.

Higher Education Tax Credits

Taxpayers can claim the American Opportunity Tax Credit (AOTC) and/or the Lifetime Learning Credit (LLC) to help offset tuition and other costs that accompany higher education.

Retirement Savings Contributions Credit (Saver’s Credit)

The Saver’s Credit is available to taxpayers who made eligible contributions to their IRA or employer-sponsored retirement plan. The credit amount depends on the taxpayer’s AGI.

Taxpayers can claim this credit if they paid expenses to care for a qualifying individual so they can work or look for work. A qualifying individual is either a dependent under the age of 13, a dependent or spouse incapable of caring for themselves.

The deduction amount for gifts to charity depends on if a taxpayer takes the standard deduction or if they itemize deductions.

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