Tax breaks you might accidentally overlook this year

W4 tax form with money, calculator on desk.
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The rush is on at Liberty Tax and other tax preparers right now.

Customers like Alex Trejo — who just started his own small business — are trying to find all the tax breaks they can.

“I’ve got to figure out what am I going to do now, how much do I have to pay — it’s all overwhelming,” he said.

Liberty Tax franchise owner Gina Pinto says a professional can find a lot of credits people miss on their own.

“There are a lot of new credits this year, especially for the child care this year. It is new,” she said. “If (filers) do it themselves at home, they may not be aware of these changes.”

Tax season is always confusing. But preparers say this year is a bit more confusing than others because of pandemic-related stimulus and credits, which many people did not receive in full.

“If somebody didn’t get the stimulus checks, the only way they can do it, they have to file a tax return,” Pinto said.

Credits and Deductions You Might Miss

Pinto says many of her Liberty Tax clients don’t realize they can get a credit for:

  • Stimulus checks: For those that didn’t get the full amount they were owed last year.
  • Child tax credits: For those shortchanged during last year’s monthly check distribution.
  • Charitable contributions: Filers can once again claim up to $300, even if taking the standard deduction — which in recent years did not allow charitable deductions.
  • Dependent care credit: The credit was just expanded to up to $8,000 annually for daycare.
  • Earned income credit: The IRS says 25% of people fail to claim it because they don’t know what it is.

Finally, PC Mag financial writer Kathy Yakal says those who built a home office during the pandemic may qualify for a deduction, but it is not easy to do.

“Declaring part of your home as a home office, that’s a really tricky deduction. You have to use one portion of your home strictly for business, and keep detailed records,” Yakal said.

Yakal says W-2 employees who worked remotely during the pandemic last year probably don’t qualify for a home office deduction.

She also wrote about some other weird tax deductions that actually pass the IRS test, including deductions for those who own a historic home, for those who had a friend fail to repay a loan and even for those who had plastic surgery in some cases.

So if you have questions, consult a tax professional, like Trejo is doing, so you don’t waste your money.

About the Author

John Matarese

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