Similar to the EITC, the child tax credit is designed to benefit working families by typically allowing them to claim up to $2,000 per qualifying child via a refundable credit. But the new stimulus bill increases the amount families can claim to $3,600 per child under age 6 and $3,000 for children over age 6. Money from the credit will be split: Half will be...
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If you were eligible to collect all or some of the first stimulus check of up to $1,200 per person or the second stimulus check of up to $600 per person, but it never arrived (or didn't accurately reflect your child dependents), you can claim your missing money on your 2020 tax return as a Recovery Rebate Credit. This credit will either increase the size...
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This year's tax season will be unusually busy for both taxpayers and the IRS, as many aspects of the coronavirus relief measures passed in 2020 will affect our tax returns," says Garrett Watson, senior policy analyst at the Tax Foundation. As always, the earlier you file your taxes, the sooner you could get a new stimulus check and speed up the delivery of any missing money...
Read MoreYou can deduct the interest paid on an auto loan as a business expense using one of two methods: the expense method or the standard mileage deduction when you file your taxes. But, writing off car loan interest as a business expense isn't as easy as just deciding you want to start itemizing your tax return when you file. In order to qualify, you have to...
Read MoreIt depends. The IRS lets you deduct medical, dental and other health expenses that fall above 7.5% of your adjusted gross income (that’s the part of your income that is taxable) for the year.16 For example, if your adjusted gross income is $50,000, first you would multiply that by 7.5% to find out that you can only deduct expenses that exceed $3,750. If you spent...
Read MoreNot so fast! Remember the Tax Cuts and Jobs Act that was passed a few years back? That law did away with a bunch of “miscellaneous itemized deductions” in exchange for a higher standard deduction. That means writing off the cost of setting up and maintaining a home office is off the table for most taxpayers. Generally, the home office tax deduction is only available for...
Read MoreNope, the stimulus money that you received from Uncle Sam will not count as taxable income. So that’s one less thing you have to worry about when Tax Day rolls around! Let’s back up a little bit. In March 2020, the U.S. government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in an effort to try and provide help to everyday Americans during the...
Read MoreIf you’re like us, you probably never want to think about 2020 again. But there is one lingering ghost from last year that you need to get rid of before you can truly move on for good—and that’s your 2020 taxes. Thanks to the coronavirus (among other things), a lot has changed for the 2021 tax season. We don’t want you to get blindsided, so let’s...
Read MoreThe IRS and Treasury Department sent two rounds of economic impact payments to individuals in 2020 as part of broader coronavirus relief packages. The payments, sometimes called stimulus payments, were sent through direct deposit, paper check, or prepaid debit cards. Technically, the payments are tax credits advanced to individuals based on their 2018 or 2019 adjusted gross income (AGI). For the filing season now underway,...
Read MoreLawmakers responded to the unprecedented increase in unemployment in 2020 with large increases in the payment of unemployment insurance (UI) benefits. The UI benefits helped support American incomes through the year and are considered taxable income. To avoid an unexpected tax bill when filing their taxes, taxpayers would have needed to correctly withhold taxes from their UI benefits. For federal income taxes, a taxpayer can opt...
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