5 Tax Credits That Can Reduce Your Taxes

A tax credit reduces the amount of tax you must pay, dollar for dollar. Here are five credits to consider before filing your 2012 federal income tax return.....

1. The Earned Income Tax Credit is a refundable credit for people who work and don’t earn a certain threshold of money. Eligibility is determined based on earnings, filing status and eligible children. If you worked and earned less than $50,270, ask your tax preparer to see if you qualify.

2. The Child and Dependent Care Credit is for expenses you paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent. The care must enable you to work or look for work. Contact me for more information.

3. The Child Tax Credit may apply to you if you have a qualifying child under age 17. The credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return.

4. The Retirement Savings Contributions Credit (Saver’s Credit) helps low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or a retirement plan at work. The credit is in addition to any other tax savings that apply to retirement plans. 

5. The American Opportunity Tax Credit helps offset some of the costs that you pay for higher education. The AOTC applies to the first four years of post-secondary education. The maximum credit is $2,500 per eligible student. Forty percent of the credit, up to $1,000, is refundable.

Feel free to contact me about these, or any other tax credits...I'm here to help!