Right now, the deadline to file your income taxes is July 15, however there are indications that another extension may be coming.
Just this past week, the U.S. Treasury Department indicated that it may extend the filing deadline into the fall, which will give Americans more time as positive COVID-19 cases across the country rise. More time would be a good thing, as tens of millions of Americans have been impacted financially by the pandemic and would be able to take more time to fish for tax breaks to help offset some of the burden.
Even if you’ve already filed your taxes for 2019, this is a good reminder for tax breaks to look out for when you go to file next year. Here’s a closer look at some tax breaks that you might not know about (but should):
Earned Income Tax Credit (EITC)
If you’re a low income earner, you may be eligible for a tax break through the Earned Income Tax Credit, or EITC. It’s important to see if you qualify for this, especially if you’ve been significantly impacted by the pandemic. The EITC has been around since the 1970s and is specifically designed to help low-income or middle-income workers, notably those who have children. While there are earnings requirements that you have to meet to qualify for this, you also must be filing as either a single (head of household) or married and filing jointly.
Child, Dependent Care Credit
Though day cares may still be closed depending on where you live, if you’re a working parent and your child isn’t yet in all-day school, you likely sent him or her to daycare. Many filers fail to take advantage of the Child and Dependent Care Credit, which permits you to claim up to 35 percent of $3,000 for any child care costs for a child under the age of 13 and up $6,000 for multiple children. The most you’ll be helped out is $1,200, but this money can go a long way for those who need it.
Home Office Deduction
While you can’t claim this deduction simply from doing your full-time job from home, if you launched a side hustle or small business out of your home, you may be eligible for a home office deduction. If you’ve launched this small business during the pandemic, note this deduction for when you file your 2020 taxes.
There are certain requirements you must meet to qualify. For instance, the space you’re working in has to be an office – it can’t be a desk set up in your living room. And it has to be used regularly and exclusively for your side hustle or new business. If you meet these requirements, you’re able to write off a portion of associated utilities, expenses and even rent to help lower your taxable income. On a related note, even if you can’t claim the home office deduction, you should be keeping track of any expenses or supplies you’ve purchased for any side hustle, as those can serve as write offs against your reported earnings.