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How to Get a Bigger Tax Refund –

7 Deductions You Should Know

If you’re ready to file your taxes, you’ll want to take a look at some deductions you might qualify for that could put some extra money in your pocket. If you don’t know what you’re eligible for, we have some suggestions that might be perfect for you. Let’s take a look.

Child Tax Credit

If you have one or more children who are your dependents, you’ll be able to apply for the Child Tax Credit. This payment was paid in advance during the latter months of 2021 (from July to December), so you might have already received a portion of it. But when you file your taxes, you’ll get the remainder that’s owed for any children dependents within your household.

Earned Income Tax Credit

The IRS has given lower-income families a way to have a break on their taxes by offering the Earned Income Tax Credit. If you have dependent children and can file as head of household with a low income, or even if you’re single with no dependents, you’ll qualify for this credit if you have a low income. 

Charitable Donation Deduction

If you have given substantially to charities throughout the year, you’ll be able to apply for this deduction as well. Smaller donations to charity might not necessarily qualify, however.

Recovery Rebate Credit

Did you spend 2021 waiting for a stimulus payment that never arrived? Stimulus payments were determined by the IRS according to 2020’s tax returns, which means if you’ve gotten a divorce or your financial circumstances have changed in 2021, you might not have received your stimulus check. If that’s the case, once you file your 2021 tax return and inform the IRS of your new filing status, you’ll be eligible for this credit.

Mortgage Interest, Insurance Premiums, and Property Taxes Write-Off

If you’re a homeowner, you’ll be able to write off your property taxes (up to $10,000), the interest you pay on your mortgage payment, and any mortgage insurance premiums for your property. These write-offs certainly help bring down any amount you might owe the IRS, so be sure to claim these items if you own a home.

American Opportunity Tax Education Credit

If you have a student in college, even if the student is yourself or your spouse, you might qualify for this credit. This credit is only good for the first four years of college, but any education credits are worth looking into if you and/or your dependents are enrolled in college. 

Saver’s Credit and IRA Contributions

If you contribute to a retirement fund, such as a 401(k) sponsored by your employer, you might qualify for the Saver’s Credit. IRA contributions are also considered tax-deductible although you might not be able to claim both of these credits together. If you file jointly with your spouse, your deductions will depend on whether or not they have their own 401(k) contributions write-offs.

With a little time and research, you’ll be able to determine which credits you qualify for and which ones you don’t. To give you a head start on any other credits or write-offs you might qualify for, here are a few articles we’ve found on Nerdwallet, Forbes, and Cnet to get you going.

To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.


Author FJS

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