Taxpayers who earn less than the standard deduction — $12,550 for single filers in 2021— don't have to file a tax return.
However, it can make sense to file>1. The earned income tax credit
The EITC is a refundable tax credit worth up to $6,728 for low- and moderate-income workers. The credit amount is based>2. The child tax credit
The CTC is an annual tax credit available to taxpayers with children. The American Rescue Plan made the credit fully refundable for the 2021 tax year and increased the maximum amount from $2,000 to $3,600 for qualifying children under 6 and $3,000 for children under 18.
For the 2021 tax year, you get the full per-child credit if your AGI is under $75,000 for single filers, $112,500 for heads of household and $150,000 for those married filing jointly. The amount of the credit begins to phase out beyond these AGI thresholds, stopping completely at $220,000 and $440,000, for single and joint filers, respectively.
This credit is unusual in that most qualifying taxpayers have already received half the credit as monthly advance payments, sent from July through December 2021. The other half of that amount — or the full amount, if you never received monthly payments — can be claimed using Schedule 8812 in your 2021 federal tax return.
3. The recovery rebate credit for missing stimulus check payments
As part of economic stimulus bills related to the pandemic, most Americans received three stimulus checks, otherwise known as Economic Impact Payments, in 2020 and 2021. The third payment was up to $1,400 per adult, plus $1,400 per child or adult dependent.
The first two checks can no longer be claimed, but if you didn't receive the third>4. The child and dependent care credit
This credit covers some of the costs associated with caring for a child or dependent with disabilities, including after-school programs, babysitters or daycare, if that care enabled you to work.
The American Rescue Plan made this credit fully refundable in 2021>5. The American opportunity tax credit
This credit covers up to $2,500 for qualified college expenses and is partially refundable. If the credit brings the amount of tax you owe to zero, you can have 40% of any remaining amount of the credit, up to $1,000, refunded to you.
To be eligible for the AOTC, students must be within their first four years of higher education and be enrolled at least half time at some point during the tax year.
To claim the AOTC, you must file a federal tax return with a completed Form 8863 attached to your Form 1040 or Form 1040A.
6. The premium tax credit
If your income is between 100% and 400% of the federal poverty line, the PTC will reimburse the amount you spent on monthly premiums for health insurance purchased through the Health Insurance Marketplace.
These federal poverty line thresholds are actually higher than the minimum amount needed to file a tax return. However, if you received unemployment compensation for any week beginning during 2021, your household income is automatically considered to be 133% of the federal poverty line and therefore qualifies you for the credit.
To claim it, you must file a federal income tax return and attach Form 8962. More information about claiming this credit can be found here.
