603 Tax Tips- 2021 Refundable Tax Credits can make a BIG Difference
Refundable Tax Credits
(And how to get them.)
By : Barbara Heggie
Supervising Attorney- Low-Income Taxpayer Project
What are they?
Refundable tax credits are payments from the IRS. If you don’t owe any tax, the whole amount will come to you as a refund. If you do owe some tax, the credits will pay down whatever you owe, and then you’ll get any leftover credits.
What kinds of credits are there?
These are the major ones for 2021:
· Recovery Rebate Credit – If you didn’t get your third-round, $1,400 stimulus payment, you can claim it on your tax return as a “Recovery Rebate Credit.”
· Child Tax Credit – The total is $3,000 for each child over 5 and $3,600 for each child under 6. The advance payments were for half the total credit, so if you got some, you need to file a tax return to get the rest. If you didn’t get any advance payments, you can file a tax return to get the whole amount of the credit, if you qualify. YOU DO NOT NEED TO HAVE ANY INCOME TO GET THIS CREDIT.
· Earned Income Tax Credit – Depending on your income, this is worth up to $6,728 if you’re claiming three or more children, $5,980 for two; $3,618 for one, and $1,502 for none.
· Child and Dependent Care Credit – This one is much higher than it used to be – up to $4,000 per child. Keep this in mind if you had to pay someone outside your family to take care of your dependents while you were working or going to school.
How can I get one of these credits?
If you qualify for a credit, you can get it by filing a tax return.
How do I know if I qualify?
Go to https://www.eitc.irs.gov/eitc-central/child-related-tax-benefits-comparison/child-related-tax-benefits-comparison or https://www.irs.gov/help/ita. Or get help from a trained tax return preparer. Or use tax prep software, which can help you figure this out.
How do I file a tax return?
You can file a tax return by mail or online.
Can I get a person to help me file a tax return for free?
Yes! Call 211 or go to www.nhtaxhelp.org to make an appointment with Volunteer Income Tax Assistance (VITA) or AARP Foundation Tax-Aide. If your income is low or zero, these tax prep places will do your taxes for you for free.
Can I do it myself online for free?
YES. Here are some good choices:
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
What if I mess up or the IRS says there’s a problem?
You can ask us for help. If you’re eligible, our Low-Income Taxpayer Project can help. Click HERE to apply online.