New Tax Breaks You Should Know

While your tax information could look the same year over year, the tax write-offs you could be taking advantage of do not. Every year there is a variety of changing and evolving tax breaks you need to be aware of so you can maximize your refund or lower your obligation. 

Tax Credits for Students

In the past, the feds required that you be a full-time student in order to qualify for tax incentives. Today, you can claim a lifetime learning credit for any courses you completed, even if they are simply continuing education courses. 

The incentive is for qualified expenses only. Those include

  • books used for your course
  • other materials required for the course
  • tuition 
  • other fees charged by the learning institution.

You could be eligible for up to 20% of your expense with a maximum of $2,000 per return. That’s not a bad incentive if learning is important to your career goals, or even your personal goals. 

Deductions for Self-employed

The label “self-employed” encompasses a variety of situations, and not all of them may equal full-time work. Now, write-offs for the self-employed have become more lenient.

Whatever your situation, if you’re a freelancer you can make deductible contributions to a simplified employee pension or solo 401(k). The cap is up to $20,500 of your annual salary plus another $6500 if you’re over 50. Of course, your contribution cannot be more than you earned. 

Summer Camp Tax Breaks

Did you send your children to summer camp in 2021? You might be surprised to learn that counts as dependent care. You can claim up to $4000 in expenses for a single child, and $8000 if you have more than one child. There are a few stipulations:

It must be a day camp only–no overnights.

Children must be under the age of 13.

Your adjusted gross income must be $125,000 or less.

The credit is worth as much as 50% of expenses up to $8,000 for one eligible child.

The higher your income, the lower the eligible percentage becomes. The dependent care tax credit is not applicable if you have an income greater than $438,000. 

Tax laws are in a constant state of flux, so it can be difficult to keep up with yearly changes. These are just a few of the new tax write-offs available to taxpayers this year. Talk to your tax accountant to see if there are more incentives you may qualify for.