Even if you were not expecting to file a tax return for the 2021 year, the Internal Revenue Service is urging you to consider filing, as it could pay off. Literally.

The IRS recently issued a notice about expanded tax credits for families and other expanded credits and benefits potentially available to many eligible filers. This includes the Recovery Rebate Credit, Child Tax Credit, Credit for Child and Dependent Care Expenses and the Earned Income Tax Credit.

The expanded benefits, according to the IRS, could mean larger refunds for many people who file.

In fact, parents of children who were born last year and families who added a new dependent in 2021, may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for the baby. The IRS is also urging eligible parents of children born or adopted or brought in under foster care in 2021 to claim the Child Tax Credit, which is worth up to $3,600 per eligible child. Families who added a dependent – such as a parent, a nephew or niece, or a grandchild – on their 2021 income tax return who was not listed as a dependent on their 2020 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this dependent, says the IRS.

Other potential benefits available to those who qualify include:

• For tax payers who missed out on stimulus payment, they may be eligible to a Recovery Rebate Credit. This is for eligible people who didn’t receive the third round of Economic Impact Payments, also known as stimulus payments, or who didn’t receive the full amount. They may claim the Recovery Rebate Credit (RRC) when they file if eligible, according to the IRS.

You can use an IRS online account to see the total amount of a third Economic Impact Payment under the related tax year tab. Through March, the IRS is also sending Letter 6475 to each person who received the initial EIP3, a “plus-up” payment, or both. Married spouses who received joint payments will need to log into their own online account or review their own letter for their portion of the total payment. Recipients must use the information to figure their Recover Rebate Credit.

Filing electronically and tax preparation software should help filers figure their Recovery Rebate Credit, according to the IRS, as can the Recovery Rebate Credit Worksheet in the 2021 Form 1040 and Form 1040-SR instructions. For more information, visit IRS.gov/rrc.

• Check for the Expanded Child Tax Credit for 2021. The American Rescue Plan increased the amount of the Child Tax Credit; made it available for 17-year-old dependents; made it fully refundable for most families; and made it possible for families to receive up to half of it, in advance, in monthly payments during the last half of 2021, according to the IRS. Also, families can get the credit, even if they have little or no income from a job, business or other source.

To get the CTC, eligible families must file a return, even if they received monthly payments. In addition, everyone must attach Schedule 8812 to their return.

• The Child and dependent care credit increased for 2021. The American Rescue Plan increased the amount of the credit and eligible expenses for child and dependent care, modified the phase-out of the credit for higher earners and made it refundable, according to the IRS. For 2021, the top credit percentage of qualifying expenses increased from 35% to 50% and eligible taxpayers can claim qualifying child and dependent care expenses of up to: $8,000 for one qualifying child or dependent, which is up from $3,000 in prior years, or $16,000 for two or more qualifying dependents, up from $6,000 before 2021. So, according to the IRS, the maximum credit in 2021 of 50% for one dependent’s qualifying expenses is $4,000, or $8,000 for two or more dependents. Employer-provided dependent care benefits such as those provided through a flexible spending arrangement, however, must be subtracted from total eligible expenses, according to the IRS. Under the new law, more people will qualify for the new maximum 50% credit rate, because the adjusted gross income level at which the credit percentage is reduced is raised from $15,000 to $125,000, according to the IRS. The AGI is the amount shown on Forms 1040 and 1040-SR, Line 11.
• Childless EITC expanded for 2021. For 2021 only, more childless workers and couples can qualify for the Earned Income Tax Credit, a fully refundable tax benefit that helps many low- and moderate-income workers and working families, according to the IRS. That’s because the maximum credit is nearly tripled for these taxpayers and is, for the first time, made available to both younger workers and senior citizens, says the IRS. In 2021, the maximum EITC for those with no dependents is $1,502. Available to filers with an AGI below $27,380 in 2021, it can be claimed by eligible workers who are at least 19 years old. Formerly foster youth and those who are homeless may qualify if they are at least age 18. Students under age 24 usually don’t qualify.

For more information on the new changes and for more details, see https://www.irs.gov/newsroom/irs-expanded-credits-for-families-highlight-tax-changes-for-2021-many-people-who-dont-normally-file-should-file-this-year.

SAMPAN, published by the nonprofit Asian American Civic Association, is the only bilingual Chinese-English newspaper in New England, acting as a bridge between Asian American community organizations and individuals in the Greater Boston area. It is published biweekly and distributed free-of-charge throughout metro Boston; it is also delivered to as far away as Hawaii.