It’s easy to overlook opportunities to save when you’re not familiar with the ins and outs of taxes. Missing out on valuable tax breaks can be the difference between getting a tax refund or owing Uncle Sam…or getting a refund that’s less than what you deserve. The good news is ezTaxReturn can help you take advantage of tax credits and deductions you may otherwise miss. Here are some tax breaks filers commonly overlook.
The Child Tax Credit can get you up to $2,000 per child
Welcomed a new bundle of joy into the family last year? Congratulations! You’re about to have even more to reason celebrate because you’re now eligible for the Child Tax Credit. It is worth up to $2,000 for each qualifying child under the age of 17.
Save up to $2,500 with the American Opportunity Tax Credit
Between tuition, books and fees, going to college costs an arm and a leg. Fortunately, your expenses can help you qualify for an education credit to lower your tax bill. If you’re an undergraduate student, you may be able to claim the American Opportunity Tax Credit which is worth up to $2,500 and is partially refundable. That means if you’ve paid all the necessary taxes and some of the credit is leftover, you can get up to 40% (or $1,000) as a refund. Doing your taxes can be fast, ez and stress-free. File with ezTaxReturn and get the biggest possible refund, guaranteed.
Workers can get over $6,000 through the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) ranges from $560 to $6,935 depending on how much you make, the number of kids you claim and your marital status. Generally, those with larger families get a higher credit amount. Smaller families or single individuals with no kids can claim the EITC, but don’t expect to receive the maximum credit. The income limits are as follows:
Single, head of household or widowed
- $53,057 with three or more qualifying children
- $49,399 with two qualifying children
- $43,492 with one qualifying child
- $16,480 with no qualifying children
Married filing jointly
- $59,187 with three or more qualifying children
- $55,529 with two qualifying children
- $49,622 with one qualifying child
- $22,610 with no qualifying children
Your investment income must also be less than $10,300 for the year.
Your child care expenses can help you get a tax break
Paying for childcare can take a big bite out of your budget. Fortunately, you may be able to claim the Child and Dependent Care Credit to recoup some of the costs when you do your taxes. How much can you claim for the Child and Dependent Care Credit? For tax year 2022, working parents can claim up to $3,000 in childcare expenses for one qualifying child and $6,000 for two or more qualifying children. The maximum credit is 35% of your expenses. To qualify, your dependent must be 12 or younger or a dependent or spouse of any age who is incapable of taking care of themselves. Your dependent must also live with you for at least half of the year.
Charitable donations are tax-deductible
Giving to those in need makes you feel good and can help you save money on your taxes. Whether you volunteer, give cash, or donate property to a qualified organization, your charitable contribution may be tax deductible. But you must itemize to claim the deduction. Keep in mind that if you donate $250 or more, you must get a receipt from the organization.
You can claim gambling losses
When it comes to gambling, you win some and you lose some. The IRS doesn’t care whether your prize money comes from a lottery ticket, horse race or the casino, they expect you to report your winnings on your tax return. But what you probably don’t realize is that if you itemize, you can deduct your gambling losses. However, it cannot exceed the amount of your winnings. So, if you won $500, but lost $800, you can only deduct $500 of your losses.
Up to $300 of educator expenses are tax-deductible
It’s not uncommon for teachers to dig into their own pockets to ensure their students have everything they need. And your generosity will pay off at tax time. Educators are allowed to deduct up to $300 of unreimbursed expenses. Qualified expenses include professional development courses, books, supplies computer equipment, and items that prevent the spread of Covid-19. Make sure to save your receipts if you plan to take the educator expense deduction.
The Saver’s Credit is available for taxpayers saving for retirement
Taxpayers who contribute to a retirement plan, deferred compensation plan or an IRA, may qualify for a Saver’s Credit when they file. You can claim the credit if you’re at least 18 years old, not a full-time student and not claimed as a dependent on anyone else’s tax return. Your adjusted gross income also cannot be more than $68,000 if you’re married filing jointly, $51,000 if you’re head of household or $34,000 if you’re single. If you meet the qualifications, you can receive a maximum credit of $1,000 ($2,000 for married couples filing jointly).
Health Savings Accounts (HSAs) offer a triple-tax advantage
If you have a high-deductible health plan, opening a health savings account (HSA) can help you cover medical expenses more easily and lower your tax bill. An HSA lets you save pre-tax dollars to pay for medical expenses not covered by your insurance. The money you save lowers your taxable income, so you pay less taxes. Your money grows tax-free, and your withdrawals are tax-free when used for eligible medical expenses. For 2022, the HSA contribution limit is $3,650 for individual coverage and $7,300 for family coverage. Once you turn 55, you have the option of contributing an additional $1,000. The deadline to make contributions for 2022 is April 18, 2023.