Tax tips for non-itemizers

The near doubling of the standard deduction a few years ago hasn’t necessarily simplified tax preparation. The tax code is replete with credits and deductions for taxpayers who claim the standard deduction — and that list got a little longer in 2020.

Here are some tax breaks non-itemizers should not overlook this tax season:

Charitable deduction. Last year’s CARES Act includes a provision that allows non-itemizers to deduct $300 in cash contributions to charity. The deduction is based on your tax return, not per person, so the maximum a married couple who file jointly can deduct is $300. To claim this deduction, you need to have made a cash contribution to a qualified charity by Dec. 31.

Child tax credit. A new baby brings sleepless nights, unbounded joy and a $2,000 tax credit. There’s no limit to how many kids you may claim on a return, as long as they qualify. But the credit begins to disappear as income rises above $400,000 on joint returns and above $200,000 on single and head-of-household returns.

Childcare credit. If you paid for child care and your children are younger than 13, you’re eligible for a credit of 20% to 35% for up to $3,000 in expenses for one child or $6,000 for two or more. The percentage decreases as income increases.

College credits. The American Opportunity tax credit is available if students are in their first four years of undergraduate study. The credit is worth up to $2,500 for each qualifying student. Married couples filing jointly with modified adjusted gross income (MAGI) of up to $160,000 can claim the full credit; those with MAGI of up to $180,000 can claim a partial amount.

The Lifetime Learning credit, meanwhile, isn’t limited to undergraduate expenses, and you don’t have to be a full-time student to claim it. The credit is worth up to 20% of $10,000 in qualified expenses, up to a maximum $2,000 a year. For 2020, a married couple with MAGI of up to $118,000 can claim the full credit; those with MAGI of up to $138,000 can claim a partial amount. You can’t claim both this credit and the American Opportunity credit for the same student in the same year.

Student loan interest deduction. In response to the pandemic and economic downturn, Congress and the White House placed a moratorium on student loan interest and payments last year — and the relief continued into 2021. But if you decided to keep making payments on your federal student loans, take advantage of an above-the-line deduction on interest. You can deduct up to $2,500 in student-loan interest for you, your spouse or a dependent. The deduction phases out if your modified AGI is between $70,000 and $85,000 ($140,000 and $170,000 for joint filers). A former student can claim this deduction even if Mom and Dad are making the payments.