Four Ways to Boost Your 2020 Tax Refund
The Internal Revenue Service (IRS) officially began processing 2020 tax returns on February 12, 2021. As you prepare your tax paperwork, take into consideration these four ways you could boost your refund this year.
Itemize your deductions
The standard deduction is $12,400, so it’s tempting to claim it rather than tracking down receipts and tax forms so you can itemize your deductions. But itemizing might be worth it if you are a homeowner with a sizeable mortgage, gave money or items to charity or paid points when you took out your mortgage. If you are an educator, you can deduct up to $250 of school supplies even if you don’t itemize deductions. Start gathering information right away so you’ll have everything ready when you file.
Claim education expenses
If you are paying college expenses for yourself, your spouse or a child, two education credits can help defray those costs: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is a partly reimbursable credit for 100% of the first $2,000 of education expenses you pay and 25% of the next $2,000. The Lifetime Learning credit (LLC) is 20% of the first $10,000 of education expenses. The AOTC is eliminated once your income exceeds $90,000 and the LLC at $68,000. There are other differences as well, so weigh your options carefully in deciding which credit to claim.
Claim credit for your “full house”
If your adult children, their significant others and friends have come to live with you, you may be eligible to claim a $500 tax credit for non-child dependents you support if their income is less than $4,300. You can claim the credit for parents you support, even if they don’t live with you.
Deduct BAD DEBT
If someone owes you money that you can’t collect, you can possibly claim that as a bad debt deduction. Write a description of the debt that includes the name of the debtor, the amount and the date the debt was due and any relationship between you and the debtor. Describe the efforts you made to collect and why you think the debt is now worthless.
Get your biggest possible tax refund
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The information in this article for general educational purposes only and not intended to provide specific advice or recommendations. Please discuss your particular circumstances with an appropriate professional before taking action.
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