Every year the thought of preparing tax returns can be daunting for many tax payers. One major issue to explore is what tax credits may be available to help you and your family. This year is no different and the time to file is now, so check out these credits for which you may qualify.
For those with earnings less than $63,698, you may qualify for the federal Earned Income Tax Credit (EITC). The amount of credit depends upon the number of dependent children, but those without children may also qualify.
Requirements include being between the ages of 25 and 65. You may not be claimed as a dependent on another’s tax return. Credit amounts range from $600 if you have no dependent children up to $7,430 for those with three or more children.
Another federal government program, the Child Tax Credit (CTC), is offered with the possibility of receiving up to $2,000 per child under 17. To receive these credits an individual’s annual income must be $200,000 or below, or $400,000 or less, if parents are filing a joint return.
Additionally, some states including California, New Mexico, Kansas, and New York offer a state tax credit often referred to as the Child and Dependent Care Tax Credit. Be sure to check if your state offers this program.
For individuals pursuing higher education, you may receive a tax credit toward education expenses. The maximum credit is $2,500 per year. If this brings you below zero taxes owed, you may receive up to 40 percent of any additional amount returned to you with a maximum set at $1,000.
If you are 18 or older, not claimed as a dependent on someone else’s tax return, and are not a full-time student, you may qualify for a federal Saver’s Credit. As an individual you may receive up to a $1,000 credit or if filing jointly, up to a $2,000 credit if you have contributed to an eligible retirement account during the tax year.
Turns out that buying and driving an electric vehicle may not only save on your fuel bills while helping the environment, but it may also help you save on your federal taxes. You may receive a tax credit of up to $7,500 if you bought a new electric plug-in or fuel cell electric vehicle during the past year.
In some circumstances, you may be able to have your credit transferred to a dealer when buying a vehicle to lower the vehicle cost. This can be complex, and it is best to further investigate before trying to use it.
First implemented in 2023, the Residential Clean Energy Credit may credit up to 30 percent of the cost of various clean energy installations for your home. This credit involves installations from 2022 through 2033 and placed into service by 2034 for such things as solar energy, geothermal, wind energy, and more. If you use a full 30 percent credit in one year, you may be able to carry unused credits into future year filings.
Various tax credits can offer a lot of savings for a variety of circumstances. Whether you file yourself or use a tax service, be sure to do your own research, and don’t be afraid to ask experts for tips and a better understanding of those credits you deserve.
Earned Income Tax Credit
For those with earnings less than $63,698, you may qualify for the federal Earned Income Tax Credit (EITC). The amount of credit depends upon the number of dependent children, but those without children may also qualify.Requirements include being between the ages of 25 and 65. You may not be claimed as a dependent on another’s tax return. Credit amounts range from $600 if you have no dependent children up to $7,430 for those with three or more children.
Child Tax Credit
Another federal government program, the Child Tax Credit (CTC), is offered with the possibility of receiving up to $2,000 per child under 17. To receive these credits an individual’s annual income must be $200,000 or below, or $400,000 or less, if parents are filing a joint return.
Individual State Child and Dependent Tax Credits
Additionally, some states including California, New Mexico, Kansas, and New York offer a state tax credit often referred to as the Child and Dependent Care Tax Credit. Be sure to check if your state offers this program.
American Opportunity Tax Credit
For individuals pursuing higher education, you may receive a tax credit toward education expenses. The maximum credit is $2,500 per year. If this brings you below zero taxes owed, you may receive up to 40 percent of any additional amount returned to you with a maximum set at $1,000.
Retirement Savings Contribution Credit
If you are 18 or older, not claimed as a dependent on someone else’s tax return, and are not a full-time student, you may qualify for a federal Saver’s Credit. As an individual you may receive up to a $1,000 credit or if filing jointly, up to a $2,000 credit if you have contributed to an eligible retirement account during the tax year.
Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Turns out that buying and driving an electric vehicle may not only save on your fuel bills while helping the environment, but it may also help you save on your federal taxes. You may receive a tax credit of up to $7,500 if you bought a new electric plug-in or fuel cell electric vehicle during the past year.In some circumstances, you may be able to have your credit transferred to a dealer when buying a vehicle to lower the vehicle cost. This can be complex, and it is best to further investigate before trying to use it.
Residential Clean Energy Credit
First implemented in 2023, the Residential Clean Energy Credit may credit up to 30 percent of the cost of various clean energy installations for your home. This credit involves installations from 2022 through 2033 and placed into service by 2034 for such things as solar energy, geothermal, wind energy, and more. If you use a full 30 percent credit in one year, you may be able to carry unused credits into future year filings.
Benefits of Tax Credits
Various tax credits can offer a lot of savings for a variety of circumstances. Whether you file yourself or use a tax service, be sure to do your own research, and don’t be afraid to ask experts for tips and a better understanding of those credits you deserve.
Related Articles
Stay Informed
Get the best articles every day for FREE. Cancel anytime.