Avoid The Tax Season Trap and Increase Your Wallet With Tax Credits
Why lose out on more money than you need to during tax season?
One way to increase the amount of money in your wallet - in addition to tax returns and working a second job - is to consider tax credits. Tax credits are subtracted from the amount of tax that you owe, which gives you more opportunity to increase money in your savings account or to go towards bills. Below is a list of some tax credit options to help you through this whirlwind of number crunching.
Earned Income Tax Credit (EITC)
If you are single and make between $14,900 and about $47,000 (up to $53,500 if married, filing jointly) you can claim EITC. This amount is dependent on the number of children you have and marital status. Since this is a refundable tax credit, you may be eligible to receive a refund. The number of dependent children can alter the amount of EITC available to you. In order to claim EITC, you have to file for a tax return first (even if you don’t owe any taxes or are not required to file). According to the FDIC, any refund that you receive as a result of taking the EITC will not be used to determine your eligibility or how much you can receive from TANF, Medicaid, Food Stamps, and Housing Assistance.
Child Tax Credit
You can receive a tax credit up to $1,000 for each qualifying child.
Child and Dependent Care Credit
This accounts for the cost of caring for a child and/or dependent while you are working or looking for work. You can receive up to $3,000 for the care of one individual or up to $6,000 for the care of two or more individuals. These expense can include - but are not limited to - daycare, before- or after-school activities, babysitters, home caregiver, etc.
You can claim both the child tax credit as well as the child and dependent tax credit at the same time, as long as you qualify for both.
Lifetime Learning Credit
It pays to learn. There is up to $2,000 available per tax return and there is no limit on the number of years you can claim this credit. You can be enrolled and taking courses at an eligible higher educational institution. This credit is for eligible tuition and other related expenses while pursuing undergraduate, graduate, and professional degrees.
Retirement Savings Contributions Credit (Saver’s Credit)
Savings is important. This program allows you to get a tax credit for retirement savings dollars that you put away. Saver’s credit is available if you have an Adjusted Gross Income (AGI) below $30,000 ($45,000 if head of household; $60,000 if married filing jointly) you will be able to save money for retirement and reduce the taxes you owe.
By using tax credit to increase your income you are putting yourself in a better financial position to save more money.
Again, the amount of credit you receive varies depending on your marital status as well as the number of dependents. For more information about other tax credit options and for the qualifications for each tax credit, visit the IRS website.