Tax credits are great way to lower your tax bill, dollar for dollar, and save you money. So, don’t let them slip by you. Here are a few you might be overlooking.
Tax credits for children and dependents
There are several tax credits targeted at families with children and other dependents. For starters, the Child Tax Credit allows you to deduct up to $2,000 for each qualifying child under age 17 you claim as a dependent. This credit could give you a refund even if you owe no tax.
With the Child and Dependent Care Credit you may be eligible for a federal tax credit of up to 35% of the cost of day care for your children or a disabled adult dependent, depending on your income. You may be able to claim this credit if you have children age 12 or younger or dependents of any age who are unable to care for themselves. This credit is available to taxpayers with dependents for whom they cannot claim the Child Tax Credit.
If you are age 65 or older, or are under 65, retired and living off of permanent and total disability, you may be eligible for a tax Credit for the Elderly or the Disabled, depending on your income. The credit ranges between $3,750 and $7,500.
Paying for college can be a costly investment. However, there could be some financial relief come tax time when you apply education credits. The Lifetime Learning Credit can be used to offset qualified tuition costs and other related educational expenses that are used to improve job skills. Eligible students enrolled at an eligible institution may be able to claim up to $2,000 per tax return.
When you or your dependents are pursuing postsecondary education, the American Opportunity Tax Credit (AOTC) offsets the costs of tuition, enrollment and course materials. The credit amount — up to $2,500 per student, per year — is limited to four years of eligible costs. The AOTC can’t be claimed in years where the Lifetime Learning Credit is claimed for a student. In other words, you’ll have to choose to claim either the AOTC or the Lifetime Learning Credit for each student.
Income-based, healthcare and retirement tax credits
The Earned Income Tax Credit (EITC) helps qualified low- to moderate-income taxpayers reduce their tax obligation. Like the Child Tax Credit, the EITC may even provide a tax refund, even if you owe no taxes.
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.
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 (or the first $4,000, if married and filing jointly). This includes amounts you contribute to IRAs, 401(k) plans and other workplace retirement plans.
Get help with filing your taxes
Don’t lose out by not claiming credits for which you are eligible. You can use the IRS’ Interactive Tax Assistant to help determine if you can claim any of these credits.
For help with your tax preparation, turn to your Credit Union. LGFCU offers low-cost tax help in-person at a branch near you. You may also want to check if your family qualifies for no-cost tax preparation services in your community. Or, take advantage of the TurboTax discount available to members, if you prepare your own taxes online.
The advice provided is for informational purposes only. Consult your tax advisor for additional guidance.