That’s because there appears to be plenty of other extra savings to take advantage of thanks to new tax breaks, credits, and expanded health benefits—which could potentially save families up to a whopping $50,000. Let’s dig in to see how this all adds up.
Child Tax Credit
Know that President Joe Biden’s $1.9 trillion American Rescue Plan enabled the green-lighting of these new tax credits. Before, child tax credits generally allowed families to claim a credit of up to $2,000 for children under the age of seventeen, but that benefit now has been extended to lower-income families who otherwise wouldn’t receive such a windfall. Now, the legislation allows families to collect as much as $3,600 annually for a child under the age of six and up to $3,000 for children between six and seventeen—which means that for a family headed by a couple earning under $150,000 or an individual earning below $75,000, they are eligible to receive a $250 or $300 payment each month.
COBRA Insurance Premium Coverage
The recently unemployed can buy insurance coverage through a former employer under the government Consolidated Omnibus Budget Reconciliation Act program—which can be very expensive. But via the new legislation, the government will pay COBRA premiums from April 1 through Sept. 30.
Earned Income Tax Credit
The earned income tax credit (EITC) is designed to lower taxable income and wages, which can in the end be thousands of dollars. Eligibility for EITC depends on an individual’s adjusted gross income, filing status, and the number of dependents claimed.
Stimulus Check Recovery Rebate
Those who didn’t receive either of their first two rounds of stimulus checks should know that there are options out there. The IRS has reminded those affected that for this tax season, a Recovery Rebate Credit has been added to all returns so that people can eventually receive the overdue payments. “If you didn’t get any payments or got less than the full amounts, you may qualify for the Recovery Rebate Credit and must file a 2020 tax return to claim the credit even if you don’t normally file,” states the IRS website.
Child Care Credit
To make child care more affordable, families potentially could get back as a tax credit as much as half of their overall spending on child care for children under the age of thirteen, up to $4,000 for a single child, and $8,000 for two or more children. The credit is refundable and available to families making less than $125,000 a year.
Those who contribute to an IRA or an employer-sponsored retirement plan might be able to claim a saver’s credit. To be eligible, one must be eighteen or older, not be claimed as a dependent, and is not a current student.
Credit for Seniors and People With Disabilities
Individuals over the age of sixty-five and those retired on permanent and total disability who received taxable disability income may qualify for a tax credit of up to $7,500.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.