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These are some hidden IRS tax credits many people will miss this year

Tax Season Begins
Posted at 6:00 AM, Mar 09, 2022
and last updated 2022-03-10 05:07:17-05

The rush is on at Liberty Tax, and other tax preparers right now.

Customers like Alex Trejo -- just starting his own small business -- are trying to find all the tax breaks they can.

"I gotta figure out what am I going to do now, how much do I have to pay, it's all overwhelming," he said, while waiting to have his taxes done.

Liberty Tax franchise owner Gina Pinto says a professional can find a lot of credits people miss on their own.

"There are a lot of new credits this year, especially for the child care this year, it is new," she said. "If they do it themselves at home they may not be aware of these changes."

Tax season is always confusing, but preparers say this year is a bit more confusing than others, because of all the stimulus and credits that have been going out during the pandemic, which many people did not receive in full.

"If somebody didn't get the stimulus checks," Pinto said, "the only way they can do it, they have to file a tax return."

Hidden credits you may miss

Pinto says many of her Liberty Tax clients don't realize they can get a credit for:

  • Stimulus checks: If you didn't get the full amount you were owed last year.
  • Child Tax Credits: If you were shortchanged during last year's monthly check distribution.
  • Charitable contributions: This is a big one for many taxpayers. You can now claim up to $300 again, even if you take the standard deduction (which in recent years did not allow charity deductions).
  • The Dependent Care Credit: It was just expanded to up to $8,000 annually for daycare.
  • The Earned Income Credit, which the IRS says 25% of people fail to claim, because they don't know what it is.

Finally, PC Mag financial writer Kathy Yakal says if you built a home office during the pandemic you might qualify for a deduction, but it is not easy to do.

"Declaring part of your home as a home office, that's a really tricky deduction. You have to use one portion of your home strictly for business, and keep detailed records," Yakal said.

Yakal says if you are a W-2 employee working remotely during the pandemic last year, you probably don't qualify for a home office deduction.

She also wrote about some other weird tax deductions that actually pass the IRS test, such as owning a historic home, having a friend stiff you on a loan, even plastic surgery in some cases.

So if you have questions, consult a tax professional, like Alex Trejo is doing, so you don't waste your money.

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