Tax Credits

There’s not much that can make you happy about paying taxes. But tax credits can help reduce your tax liability, it is a good idea to be informed about which credits you are eligible for and how you can claim them. You reduce the amount of taxes you owe for the tax year by using tax credits and some credit is even reimbursable to you. If you qualify for a refundable credit, you can still receive a refund even if you don’t have to pay taxes. These five tax credits can help to reduce the financial stress of tax time.

Earned income credit-This credit is available to taxpayers who work but do not have a large salary. Things like total income, status of filing and dependents determine eligibility for this credit. In certain circumstances, some taxpayers who file single with no dependents may also be eligible for this credit.

Credit for child and dependent care-This credit is available to taxpayers who take advantage of services for children under the age of 13. If you pay for care for disabled dependent adults or spouses, you can also claim this credit.

Child tax credit-This credit reduces your liability by $1,000 per admissible child. Each child must be under 17 years of age and dependent. There may be additional requirements for eligibility, but this credit can help raise children.

Credit from Saver-This is available if you contribute money through your employer to an IRA or qualified retirement plan. You may qualify for this credit if your income is less than $60,000 per tax year.

The American Opportunity Credit-This credit can help to reduce the cost of the first four years of college. If you are eligible for a full academic term, you can receive a credit of up to $2,500 if you are registered for at least half-time. A Form 8863, Education Credits and your tax return must be submitted. If you don’t owe anything, you can even qualify for this credit.