Preparing and filing an income tax return can be stressful, especially if you aren’t sure what expenses you can get tax credits for. There are statistics out there that state that there are millions of dollars left on the table in unclaimed tax benefits for a variety of different reasons. Make sure you’re getting back what you deserve. These are not scams either. There are several credits given based on income, being environmentally friendly, the number of kids you have etc.. Here are five tax credits that you might be able to use to your advantage this year:
Dependent Care Credit
If you paid for childcare this year and your child is less than 13 years old, or if you paid for care for a spouse or dependent of any age who was unable to care for themselves, you might be able to get credit for up to 35% of your costs.
Earned Income Tax Credit
Employed people who earned less than about $50,000 can be eligible for a tax credit. To be eligible, you must also be between the ages of 25 and 65, filing single or married filing jointly and have little or no investment income. This is based on the cost of living in your local area, how many children you have, and then as stated above, the amount of yearly income you earn.
Housing Tax Credits
With the world be much more aware of things like global warming and being environmentally friendly, the government has set up several tax breaks for people who make their homes more eco friendly. So having energy saving appliances, or specially treated windows, you’re eligible for some tax credits there. So whether you’re replacing windows in Lansing Michigan or getting new appliances in Reno Nevada, it might be worth the upfront cost for the long term benefits of lower bills and bigger tax returns. Again, this credit is based on where you live and the credit value will vary based on where you live.
Lifetime Learning Credit
This educational credit allows up to $2,000 of educational expenses to be credited at tax time. For single filers, the maximum allowable income is $52,000, and for married filing jointly the maximum income is $104,000. This credit can be claimed by people who are not seeking a degree, and it can be claimed each year. It is important to remember that this credit is one that is meant to offset higher educational costs. It is meant to reduce what you owe in taxes, possibly even to zero, but is not refunded to you in any amount. So it is a deduction, not a refund. You’ll want to consult a professional when filing for something like this as it can become complicated.
Savers Tax Credit
Taxpayers who contributed to a retirement fund can receive a credit as long as they are at least 18 years old, cannot be claimed as a dependent by another taxpayer and were not a student during the year. For single filers who have gross income of less than $29,500 and heads of household who earn less than $44,250, the maximum credit is $1,000; for married filing jointly who earned less than $59,000 the maximum credit is $2,000.
While these tax credits might not have been on your mind before, now you can use them to lower your tax liability and even maximize your refund this year. If you have any questions regarding any tax matters, including the credits listed here, please consult a tax professional. It can’t be stressed enough. Filing incorrectly could result in stiff fines or even jail time, so please make sure to consult a licensed professional.