How to get more when filing income taxes

How+to+get+more+when+filing+income+taxes

Gabriella Gallardo, Special to the Courier

Reading Time: 3 minutes

Tax season can be daunting and confusing, especially during the COVID-19 pandemic. Here are some top tips college students need to know when filing income taxes for April 15, 2021. 

 

1. Take advantage of tax deductions: 

Many tax deductions get overlooked each year. An accountant or any tax filing program won’t know what kind of tax deduction you get until you tell them. The tax deductions you qualify for can make a significant difference in your tax refund.

 

  • state sales tax
  • reinvested dividends
  • out-of-pocket charitable contributions
  • Earned income tax credit
  • State income tax paid on last year’s return
  • Jury duty fees
  • The overall adjusted growth income threshold for total medical expenses

 

2. Contribute to Traditional IRA:

You can contribute to last year’s IRA until this year. According to the IRS, your contribution to a Traditional IRA reduces your taxable income by that amount, therefore reducing the amount you owe in taxes. Be aware that your tax deduction may be limited if you (or your spouse) are covered by a retirement plan at work and your income exceeds certain levels. If you haven’t considered getting a Traditional IRA, you can sign up for next year to qualify for the reduction. The benefits of having a Traditional IRA are for people who will be in a zero or very low tax bracket when they retire. In the future, if you are still able, convert all or part of the money in a Traditional IRA into a Roth IRA.

 

3. Pay attention to Tax Credits: 

Tax credits can increase your refund. The more tax credits you claim, the more hard-earned money you get to keep, reduce taxes owed or increase your tax refund. This helps low- to moderate-income workers and families get a tax break.

Here are types of tax credits to pay attention to: 

 

Working Tax Credits: Based on your filing status, anyone with a low-income who works at least 16 hours a week. What counts as a low-income, and how many hours you need to work depends on your circumstances. If you are married and are responsible for children, you must work at least 24 hours a week between the two of you. This is in addition to the existing rule that either you or your partner must be working at least 16 hours a week.

 

Lifetime Learning Tax Credit: Based on your filing status, anyone who made tuition and fee payments to a post-secondary school (after high school) during the year can claim the credit for any classes you have taken even if you are not working towards a degree. If you earn too much income during the year you will not be eligible to claim the credit at all.

 

Child and Dependent Care Credit: This is specifically for working people to help offset the costs associated with caring for a child or dependent with disabilities. There are even benefits to putting your children through school. Some states offer benefits for parents paying for parochial-school tuition and supplies for children in kindergarten through high school.

The House’s American Rescue Plan (Sec. 9611.) increases the child tax credit for 2021 to $3,000 per child ages 6 to 17 and $3,600 annually for children under 6. The enhanced payments, which specifically cover teens who are 17 for the first time, would start to phase out for individuals earning more than $75,000 a year or $150,000 for those married filing jointly.

In addition, the College of DuPage VITA (Volunteer Income Tax Assistance) partnered with Code for America for the 2021 Tax Year. COD now provides a virtual process that replicates the in-person VITA experience. 

In this Vita System, taxpayers will still receive one-on-one assistance from real, live IRS-certified tax preparers in order to reach more people, the process returns efficiently, and ensure the health and safety of the community. 

 

For more in-depth information about COD’s VITA program visit the website:

https://www.cod.edu/academics/programs/accounting/tax-prep.aspx

 

To sign up for the VITA System: https://www.getyourrefund.org/en