There aren’t many things that can make you happy when it comes to paying taxes. But tax credits can help brighten your day lower your tax liability, it is a good idea to be informed which credits you qualify for and how you can go about claiming them. By using tax credits you lower the amount of taxes you owe for the tax year and some credit are even refundable to you. You can still receive a refund even if you don’t have to pay taxes if you qualify for a refundable credit. These five tax credit can help make tax time a little less financially stressful.
The Earned Income Credit– This credit is for tax payers who work but don’t have a large salary. You can earn up to $6,143 that is refundable. Things such as total income, you’re filing status and dependents determine eligibility for this credit. Some taxpayers who file single with no dependents may also qualify for this credit under certain circumstances.
Child and Dependent Care Credit – This credit is available for tax payers who take advantage of service that provide care for children under 13 years of age. You may also be able to claim this credit if you pay for care for disabled dependent adults or spouses.
Child Tax Credit – This credit will reduce your liability by $1,000 per qualifying child. Each child must be a dependent and under 17 years of age. There maybe be additional eligibility requirements but this credit may help with the cost of raising children.
Saver’s Credit – This is available if you contribute money to an IRA or qualified retirement plan through your employer. If your income is less than $60,000 per tax year you may qualify for this credit.
The American Opportunity Credit – This credit can help make the first four years of college a little bit less expensive. If you are eligible you can receive a credit of up to $2,500 if you are enrolled at least half-time for a full academic term. You will have to file a Form 8863, Education Credits along with your tax return. You may even qualify for this credit if you don’t owe anything.
