Tax credits available to a variety of tax filers
Do not overlook the tax credits you might be eligible for this tax season, including those with children, modest income, or those still in school
Deductions and Credits for Families
There are a variety of Tax Deductions and Credits for Families.
It is the fifth season of the year, the season many consumers fear, “tax season.” Receiving one’s W-2 can bring about many different emotions; excitement and fear tend to be at the top of the list. The tax bill can be exciting if receiving a refund or can be scary if one owes money to the IRS. This article will discussed the exciting side of tax season, tax credits! There are a number of deductions that are designated for families. The three credits explored in this article are Child Tax Credit, the Earned Income Tax Credit-EITC, and the Educational Tax Credits.
Child Tax Credit.
The best way to think of The Child Tax Credit is to consider the credit funds for the additional cost linked to raising children. The credit can be as much as $1,000 per child for the 2011 tax year.
Like all tax credits, The Child Tax Credit has benchmarks that must be met in order to qualify. For example, children must have been 16 or younger on Dec. 31, must be a U.S. citizen, U.S. national or a resident alien, must be claimed as a dependent on your tax return, must be a relative or lawfully placed with the tax payer (adoption or foster child, the child must have lived with the tax payer more than half the year; and lastly, the child must not have provided more than half of his or her own financial support for the year.
Earned Income Tax Credit-EITC.
The Earned Income Tax Credit (EIC) is designed to help working citizens and their families to retain more of their hard-earned money. The EIC supplements income earned through working. The blueprint for the EIC was created to reduce taxes and increase tax refund for low- to moderated-income individuals and families. Earned income includes; salaries, wages, self-employment net earnings, tips, long-term disability benefits (before minimum retirement age), nontaxable combat pay, if you choose to include it, and union strike pay.
The maximum Earned Income Credit per taxpayer is $464 with no qualifying children, $3,094 with one qualifying child, $5,112 with two qualifying children and $5,751 with three or more qualifying children.
Educational Tax Credits.
The two major education tax credits available are the American Opportunity Credit-AOC and the Lifetime Learning Credit-LLC. The American Opportunity Credit (formerly the Hope Credit) is the most beneficial. A student in the first four years of college, vocational school and other similar educational situations can claim up to $2,500 per eligible student, per year.
The Lifetime Learning Credit is more flexible than the AOC and can be applied to undergraduate, graduate, professional degrees as well as courses to improve job skills. More information about educational tax credits can be found at http://ctlr.msu.edu/download/studentaccounts/1098T.pdf .