The deadline for filing tax returns for 2021 is fast approaching – but before then, you’ll want to gather some documents to maximize your refund.
Some will see a much larger tax return this year due to the $1.9 trillion American Rescue Act, which was signed by President Joe Biden in March, as per The Sun report.
The following documents should be on hand or available to avoid delays.
W-2 form
If you have filed taxes before, you are likely familiar with a W-2 form.
The following document provides important details about your income and taxes with your employer.
In the case that you overpaid in taxes last year, this will help you calculate your general refund.
Tax refunds received by Americans in 2021 were on average $2,775 per taxpayer, up 11% from the year before, according to the IRS.
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The Social Security Administration requires employers to file copies of W-2 and W-3 forms due to a law passed in 2015.
If you have not yet received a W-2 form, you should receive one soon.
Child tax credit letter and form
A major policy change made by the Rescue Act increased child tax credits from $2,000 to $3,600.
During the year of the expanded child tax credit, tens of millions of families were eligible to receive $300 monthly payments per child – giving each family up to $1,800.
Families that have received all of these payments will be able to claim $1,800 per child on their taxes.
If you haven’t received a letter from the IRS yet about child tax credit payments, you should expect one soon.
This document will be numbered “6419” and includes important information about the number of children who are eligible for a tax credit for 2021.
Alternatively, if you were eligible for the grant and didn’t receive it, you are eligible to claim the entire $3,600.
You’ll need to complete Schedule 8812 (Form 1040) if you were eligible for a tax credit in 2021, but did not receive one.
Form for the Child And Dependent Care Tax Credit
Tax credits of up to $8,000 will be available to families with child care costs in 2021.
In addition, the Rescue Act expanded the child and dependent care tax credit.
Those who have more than one child can now claim 50% of the qualification expenses up to $16,000, or $8,000.
With respect to the maximum expense rate, those with an adjusted gross income (AGI) of $125,000 or less can use it.
Parents with children under 13 are usually eligible for care credits, but dependents who can’t take care of themselves are also eligible.
Transportation, housekeepers, babysitters, before and after school programs, day camps, and daycare are eligible expenses.
Individuals who believe they are eligible can fill out form 2441.
Earned income tax credit
Low- and moderate-income families are eligible for the earned income tax credit.
For the 2021 tax year, the maximum credit for those without children has been increased to $1,502 from $543.
It is not necessary to have children in order to qualify, but the more you have, the bigger your refund will be.
If you have one or two children, you are entitled to $3,618 and $5,980, respectively.
Up to $6,728 can be claimed by families with three or more children.
For working people without children, the income limit is $21,430, or $27,380 if they are married and filing jointly.
With two children, single filers can earn up to $48,915, while married couples can earn up to $53,865.
The IRS requires that you submit a Schedule EIC (Form 1040 or 1040-SR) in order to provide the agency with more information about your qualifying child.
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A Letter to Stimulate the Economy
The majority of Americans received the $1,400 stimulus payments under the Rescue Act, while millions still owe them.
A letter numbered “6475” will be sent to those who received them.
Upon receiving the letter, you can know and determine if you can claim the recovery rebate credit on your tax return and how much you received in the third round of stimulus payments.
It is possible to claim the credit on your 2021 return if you did not receive the full third-round stimulus payment.
Keep your letter if you did not receive the full third-round stimulus payment.
You must file a tax return in order to claim the recovery rebate.
For the latest round of federal stimulus, single filers making up to $75,000 and couples making up to $150,000 qualify.
In addition, if your family has a child in 2021, you may be eligible for another stimulus check.
Find out how much you can expect to receive this year, check this out with the top calculators.
See if you owe any money back from stimulus checks to the IRS.
