Tax credits are great! They lower your tax bill, dollar-for-dollar and save you money, so don’t let them slip by you. Let’s look at a few you might be overlooking.
Child tax credit. You can deduct up to $1,000 for each qualifying child under age 17 you claim as a dependent.
Child and Dependent Care Credit. Depending on your income, you may be eligible for a federal tax credit of up to 35 percent of the cost of day care for your children or a disabled adult dependent. Claim the credit if you have a child age 12 or younger, or a dependent of any age unable to care for himself.
Credit for the elderly or disabled. If you are 65 or older, or under 65 and retired on permanent and total disability, depending on your income, you may be eligible for a tax credit between $3,750 and $7,500.
The Premium Tax Credit can help you get back some of what you paid on policies bought through Affordable Care Act health insurance marketplaces. If you, your spouse or a dependent bought a marketplace policy, you may be able to claim this credit.
The Earned Income Tax Credit (EITC) helps low to moderate-income taxpayers who qualify. It reduces the amount of tax you owe, or may even provide a tax refund. Beginning in 2017, if you claim this credit on your tax return, the IRS must hold any refund due to you until February 15.
You may be eligible for the Retirement Savings Contribution Credit (more commonly known as the Saver’s Credit) to help offset a portion of the first $2,000 you save for your retirement in any year. This includes amounts you contribute to IRAs, 401(k) plans and other workplace retirement plans.
Lifetime Learning Credit. This credit helps with college costs and for courses taken to improve job skills. It must be applied for qualified tuition costs and other related educational expenses by eligible students enrolled at an eligible institution. The credit can be claimed for up to $2,000 per tax return.
American Opportunity Tax Credit. When you or your dependents are pursuing post-secondary education, this credit helps with tuition, enrollment and course materials. It’s limited to four years of eligible costs and can’t be claimed in years where the lifetime learning credit is claimed for a student. The credit can be claimed for up to $2,500 per student, per year.
Don’t lose out by not claiming credits for which you are eligible. Learn about all of the credits and deductions available to you.
This article is part 1 of 3 in the “Let’s Talk Taxes” series presented by LGFCU.
The advice provided is for informational purposes only. For specific guidance talk to your tax advisor.