Parents can boost their back-to-school budget by claiming tax credits and refunds

Summer is slipping away and another school year is starting. As kids head back to the classroom, parents are ticking items off the school supply list. If they want to boost their back-to-school budgets, parents and guardians should make sure they aren’t missing out on their 2021 refunds and tax credits.

Many people don’t get their tax refund because they didn’t file a federal tax return. Some people choose not to file a tax return because they didn’t earn enough money to be required to file. Generally, they won’t receive a failure to file penalty if they are owed a refund – but they won’t receive their refund either.

A refund isn’t the only money people might be missing out on when they don’t file. If they’re eligible for tax credits, like the child tax credit and the earned income tax credit, they’re leaving that money on the table as well.

The child tax credit

The child tax credit helps families with qualifying children get a tax break. People may be able to claim the credit even if they don’t normally file a tax return.

Taxpayers qualify for the full amount of the 2021 child tax credit for each qualifying child if they meet all eligibility factors and their annual income isn’t more than:

• $150,000 if they’re married and filing a joint return, or if they’re filing as a qualifying widow or widower.
• $112,500 if they’re filing as a head of household.
• $75,000 if they’re a single filer or are married and filing a separate return.

Parents and guardians with higher incomes may be eligible to claim a partial credit. The Interactive Tax Assistant can help people check if they qualify.

The earned income tax credit

The earned income tax credit helps low- to moderate-income workers and families get a tax break. If someone qualifies, they can use the credit to reduce the taxes they owe – and maybe increase their refund.

Low- to moderate-income workers with qualifying children may be eligible to claim the earned income tax credit if certain qualifying rules apply to them. People may qualify for the EITC even if they can’t claim children on their tax return. Visit IRS.gov to learn how to claim the EITC without a qualifying child.

People who qualify for the EITC, may also qualify for other tax credits, including:

• Child tax credit and the credit for other dependents
• Child and dependent care credit
• Education credits
• Recovery rebate credit

Credit: IRS Tax Tips

Photo Credit: Family Features