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7 tax credits to slash taxes owed and increase refund

Some Americans can claim certain tax credits that will not only lower their tax bill but increase their refund by as much as $37,000 on their 2021 taxes.

In order to get the tax credits, you’ll need to claim them on your tax return before you file. They are not automatic.

Tax years run from Jan. 1 to Dec. 31 every year with a deadline to file normally on April 15.

For 2020 the deadline was extended to May 17 due to the pandemic, and next year the deadline will be April 18 due to the 15th being Emancipation Day.

Related: $10,000 in grant money available to childcare providers

Here are 7 tax credits that can lower what you owe by $36,442 if you qualify for all of them

The child tax credit is worth up to$3,600

What you’ll get back depends on your advanced payments and eligibility in 2021.

The expanded credit is worth $3,000 for kids ages 6-17 and $3,600 for children under age 6.

If you collected advanced payments you’ll only be entitled to half of that credit in 2022.

Others who opted out entirely can expect the entire credit or a bit more if they only opted out of some of the payments.

You’ll need to file your taxes even if you normally do not in 2022 to get the credit.

Related: $1,200 checks from the IRS delayed until 2022

The recovery rebate credit is worth up to $1,400

This credit is specifically for those who received only a portion of their stimulus check or no check at all even though they qualified for the entire amount.

These people most saw smaller or no payments because the IRS used 2019 tax information from the SSA or VA that was outdated and inaccurate.

These payments can be claimed by filing your taxes in 2022 as long as you meet the income requirements for 2021.

That’s earning under $75,000 per year if single, $112,500 if head of household, or $150,000 if filing married.

Related: Tax deadline is extended in some states for 2022, is yours one of them?

The earned income tax credit is worth $1,502

This tax credit is geared toward low to moderate income families who are working.

The old credit was worth $543 but has been raised for 2021 to $1,502.

Single filers can make up to $21,000 per year to claim it. Before it was $16,000.

Families that file married may make up to $27,000, up from $22,000.

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Related: Some families can claim $8,000 next month, is yours one of them?

The child and dependent care credit can be worth as much as $8,000

This credit can be claimed on your taxes by claiming expenses from the cost that goes into caring for a child.

This means babysitters, housekeepers, transportation, summer camp, or anything that costs money to care for a child.

The credit is aimed at helping offset the costs while parents work, search for work, or go to school.

In order to get back the full $8,000 you need to claim two kids under age 13.

One child could get back as much as $4,000.

Related: How to claim the Recovery Rebate Tax Credit for 2021 next tax season

You used to be able to claim and get back 35% of expenses at most but that has been raised to 50%.

So, when you claim $16,000 for two children you could see $8,000.

To claim this credit you’ll need all your expenses and to file a Form 2441 with your return.

The adoption credit is worth up to $14,440

This credit is to cover expenses that go into adopting a child in 2021.

It covers adoption fees, court fees, and traveling or attorney fees.

A child with special needs may get the credit without the qualifying expenses.

You cannot get a refund from this credit but you can lower your tax bill.

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Related: Keep these 3 changes in mind before you file your 2022 tax return

Elderly and disabled people may claim a credit worth $7,500

This credit can be claimed by Americans over the age of 65 or who have a disability.

If you’re claiming as a younger, disabled person, you need to be retired with a permanent and total disability.

You need to have received taxable income.

The credit is worth between $3,750 and $7,500.

File the Schedule R: Elderly and Disabled Tax Credit when filing your taxes to get the credit.

Related: There may be some huge bills that will surprise you in 2022, here’s how to prepare

The saver’s credit is worth up to $1,000

This credit is for low income working Americans that make contributions to a retirement account.

This can be to IRAs or qualifying employee sponsored retirement accounts.

Single filers can get a credit worth $1,000 and married filers can get $2,000.

Eligibility requirements include being over 18, not being a full time student, and not being claimed on someone else’s tax return.

File Form 8880 with your tax return to make the claim.

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