With just over a month until the April 18 tax filing deadline, it’s the perfect time for consumers to make a plan for filing.
However, what about the plan for those who may not be required by law to file? The Internal Revenue Service (IRS) is suggesting that these Americans may want to consider filing anyway.
The agency says filing may be beneficial to many people who may not have been planning to do so. To avoid missing out on potential tax credits or a refund, the IRS encourages everyone to file a tax return for 2022.
How do you know if you should file?
For people who are contemplating whether or not to file this year, the IRS first recommends utilizing the Interactive Tax Assistant. They can input specific information that pertains to their filing situation, and get their questions answered, while also keeping their personal details anonymous.
Claiming tax credits
The IRS detailed four primary tax credits that consumers may be eligible for – even when they aren’t legally required to file their taxes: Education credits, Child Tax Credit, Earned Income Tax Credit, and Credit for Other Dependents.
In terms of education credits, you may qualify for either the Lifetime Learning Credits or the American Opportunity Tax Credit. The former can be used to cover tuition and other expenses for any undergraduate, graduate, and professional degree courses, and there is no limit to how many times you can claim this credit; this can equate to a credit that tops out at $2,000.
The American Opportunity Tax Credit is only available for undergraduate students during their first four years of study. Taxpayers can claim a maximum of $2,500 per year per eligible student.
You may be eligible for the Child Tax Credit if you have children and make under $200,000 (or $400,000 combined with a spouse on a joint return). The child must be under the age of 17 and can be a child, foster child, sibling, step sibling, half sibling, grandchild, niece, or nephew that is your dependent.
The Earned Income Tax Credit (EITC) is designed to give a tax break to Americans who earned $59,187 or less in the previous year. This year, the maximum EITC credit is nearly $7,000, and people who have children and are married are likely to get the most back.
Lastly, the Credit for Other Dependents is for those who have parents or other individuals they support or dependents who are over the age of 18. Filers who don’t qualify for the Child Tax Credit are likely to be eligible for the Credit for Other Dependents.
Taxpayers can claim the Credit for Other Dependents, in addition to both the Earned Income Tax Credit and the Child and Dependent Care Credit.
The IRS hopes that consumers consider these various tax credit options before deciding whether or not to file this year.