 |
| image source: http://www.mcnuttservicegroup.com/tax_credits.html |
Many people may have never learned
the difference between tax credits and tax deductions. The actual
definition of a tax credit is something that reduces your actual tax
amount that you have to pay. This is different from a deduction because a
deduction only reduces your taxable income. This difference makes tax
credits much more beneficial, and dollar for dollar the credit will be a
better deal because it is directly subtracted from the tax owed. Here
are a few tax credits that you may not know you qualify for.
The
amount you paid for child care can be counted as a tax credit. The
credit starts at thirty-five percent if your adjusted gross income is
less than $15,000 and reduces to twenty percent if your adjusted gross
income is more than $43,000. This goes to a maximum of $3,000 for one
child and $6,000 for two or more children. The Internal Revenue Service
requires you treat most home child care workers as employees of the
household(one of the few exemptions to this rule are part-time
babysitters under the age of 18). This credit is one of the most
complicated credits to figure out, but nothing that is worthwhile is
easy.
In
order for students to recover costs associated with getting an
education, there are two different credits that they can take advantage
of: The Lifetime Learning Credit and the American Opportunity Credit.
Only one may be used a year, so choose carefully. First, the Lifetime
Learning Credit allows up to $2,000 for educational expenses enrolled in
eligible educational institutions. A pursuit in a degree is not
required to qualify for this credit. The American Opportunity Credit is a
maximum credit of up to $2,500 per student, and is available for four
years of eduction to those pursuing a degree. Anyone whose adjusted
gross income is $80,000 or less or $160,000 or less for married couples
filing jointly is not qualified for this credit.
These
credits are great ways to reduce your tax that is due, and you
definitely get the most bang for your buck if you take the time to find
the right ways to save. Keep doing your homework and you'll continue to
save, you can only see if you're qualified if you ask, so try this tax
season to qualify for all the credits you can, because no one else will
do it for you (for free at least!) and happy savings, Everyone!
And our blog: http://www.onlinetaxprofessionals.blogspot.com
Please like us on Facebook: http://www.facebook.com/onlinetaxpros
and follow us on Twitter: @onlinetaxpros
No comments:
Post a Comment