Save Money on Your 2021 Tax Return with These 5 Tax Credits
If you qualify, there are a variety of tax breaks that might help you save money on your taxes. Each tax benefit has its own set of conditions, so familiarize yourself with them to see if they'll affect your taxes. Some tax benefits have been in place for a while, while others were introduced for the 2021 tax year.
1. First Time Home Buyers. If you were a first-time home buyer before the deadline in 2010, you can claim a tax break for the 2010 tax year. This federal tax credit can offer as much as $8,000 in tax credits. If you purchased a home during 2010, contact your tax preparer to find out if you qualify for this credit.
2. New car purchases. If you purchased a new vehicle in 2010, then you may qualify to deduct all sales tax that was paid on that new vehicle during the year. This is not a credit that relies on itemizing your deductions, so you can claim it even if you claim your standard deduction for the year.
3. Other tax credits. There are more tax credits for many different purposes. If you're a student you may receive a tax credit. There are also tax credits for raising children, adopting children, fostering children, using green or eco-friendly home improvements, and more.
Explore the tax credits that are available and take advantage of the ones that you legitimately qualify for. Check the IRS website at: irs.gov or talk to your tax preparer.
4. Tax-deductible charity expenses. If you participated in charity work and had any expenses out of pocket during the process, then you've found another tax deduction.
5. Other potential tax deductions. There are several hundred potential tax deductions that you can use if you want to itemize your deductions. When you use tax preparation software or web application, the service will typically search for applicable deductions and help you find the ones that you qualify for.
•Avoid deciding whether or not to itemize your deductions or just to take the standard deduction until you really know what your options are. Taking the standard deduction may not be the best course of action if you have a lot of deductions you can itemize.
6. Ask for help. Ask for help from a tax preparer or use a software program to help you with your tax preparation if you're unsure about tax credits and deductions. Determining which course of action to take can be tricky, but it will save you money to find every deduction you're qualified to take.
If any of this is confusing to you, consider consulting a tax professional. They can tell you what tax benefits are available to you, and how to file your taxes properly so that you're not overpaying. They can also help you learn about general accounting and business practices.
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