Tax season is always a stressful time, and it was compounded by the ripple effects of the 2018 tax reform and now COVID-19. However, the core tenets of how to prepare your taxes remain the same. You need to determine the correct filing status and the deductions and credits that you are eligible for, if you are required to file a tax return at all. You can still file your taxes online or by mail despite the pandemic, although return and refund processing will take longer than usual.
- Child and Other Dependents Tax Credit: You can get a non-refundable credit of up to $2,000 per child under the age of 17, and $500 for other dependents.
- Additional Child Tax Credit: If you have three or more qualifying children, or are due the refundable portion of the Child Tax Credit worth up to $1,400, you need to claim this credit.
- Child and Dependent Care Credit: This nonrefundable credit is worth up to $3,000 for one dependent child up to the age of 13, with a max of $6,000 for two or more children if you needed childcare in order to work. You can also claim this credit for your spouse and other individuals you support who are incapable of caring for themselves.
- Saver’s Credit: Low- and moderate-income individuals can get a nonrefundable tax credit for making contributions to retirement accounts like IRAs (even Roth IRAs), 401(k) plans and other qualified plans that are worth 10% to 50% of the contributions.
- Residential Energy Credit: You can get a nonrefundable tax credit worth up to 30% of the costs of green energy home improvements, such as solar panels, geothermal pumps, and energy-efficient windows, among others.
- American Opportunity Credit: This tax credit is worth up to $2,500 and is nonrefundable but has a refundable portion worth up to $1,000. You, your spouse or dependent must be enrolled in a degree program and be in the first four years of post-high school education and not have any felony drug convictions as of the end of the tax year.
