If you’ve waited until the last minute to file your 2020 federal and Massachusetts income taxes, you still have a few days to get your returns in order, unless you owed estimated tax payments (the April 15, 2021 deadline to pay state and federal estimated tax payments was not extended). Due to COVID-19, the filing deadline for most taxpayers this year was moved from April 15, 2021, to May 17, 2021. The pandemic has also prompted several changes in federal tax law that could save you some money. Here are five tips to reduce your tax bill:

1. Earned Income Tax Credit

If your income dropped or you lost your job last year, you might qualify for an Earned Income Tax Credit (EITC). For 2020, the maximum EITC ranges from $538 to $6,660, depending on your income, if you have children and how many, and whether your filing status is single or married and filing jointly. The pandemic relief bill enacted in December allows you to use income from either 2020 or 2019 to determine eligibility, whichever gives you the largest tax credit. Your earned income and adjusted gross income (AGI) each must not exceed certain limits, ranging from $15,820 for single filers with no children to $56,844 for married couples filing jointly with three or more children.

2. Child and Dependent Care Credit

If you have a pre-teen child and paid for childcare, or if you paid for care of certain individuals, in order to work or actively look for work, you’re eligible for a tax credit. Credits range from 20 -35 percent of the cost of care, for up to $3,000 in expenses for one or $6,000 for two or more qualifying individuals:

  • Your dependent child under 13 years old when care was provided;
  • Your spouse or another dependent individual who was mentally or physically incapable of self-care, lived with you for more than half the year, and met certain other criteria.

3. Unemployment Compensation Exclusion from Modified AGI

If you were unemployed and collected compensation benefits in 2020, the American Rescue Plan enacted on March 11, 2021, allows you to exclude part of that compensation from your reported income. If your modified AGI is less than $150,000 for 2020, you don’t have to pay taxes on up to $10,200 in unemployment compensation. For married couples, the exclusion applies to each spouse who received unemployment benefits.

4. Student Loan Interest Deduction

Last year’s moratorium on student loan interest and payments continues through September 2021. If you were able to continue making your monthly student loan payments during 2020, however, and you earned less than $85,000 (filing singly) or $170,000 (filing jointly) you can deduct up to $2,500 in interest, or the actual total interest paid (whichever is less) for yourself, a spouse, or a dependent.

5. Educator’s Deduction for PPE Costs

Teachers, instructors, principals, school counselors, or aides in grades K-12, who work for at least 900 hours in the school year, may deduct part of their unreimbursed costs for personal protective equipment (PPE) purchased after March 12, 2020; up to $250 for singles and $500 for married couples if both are eligible educators. The list of equipment goes beyond face masks and hand sanitizers to include items such as plexiglass barriers, tape to mark social distancing, and other items used to stop the spread of Covid in the classroom.

Image: Vladimir Solomyani