Tax Credits That Are Easy to Qualify For

July 10, 2012 by  Filed under: Taxes 

Tax credits are tax relief opportunities that help you save on your taxes, dollar for dollar. Unlike tax deductions that reduce the amount of income to be taxed, the credit is deducted from the final tax amount. This means that a tax credit is equivalent to a payout by the tax authority to the taxpayers. There are two types of tax credits. A refundable credit will provide a taxpayer with a refund check if there is no tax to offset the credit, whereas non-refundable credits can only be applied against the tax amount. There are several tax credits that are available to taxpayers. The amounts and nature of this credits usually change from year to year and therefore, you need to verify the credits that you qualify for every time you file a return. Below are some of the most common tax credits that are easy to qualify for most taxpayers:

Children and Dependent Care Credit

The children and Dependent care Credit is given against the costs of child care for households that have a child or children below the age of 13. This credit is also available for care costs for disabled children or a disabled spouse regardless of the age. The credit is available to households where the head of household or both of the parents are involved in day jobs. Some summer day-camp costs for qualifying children may also qualify for this credit.

Child Tax Credit

The Child credit is a credit given to households that have children. The credit rises with the number of children that a taxpayer has as dependents. The maximum about of credit that one can claim is $1,000. One can claim both the Child Credit and the Children and Dependent Care Credit in the same return.

Earned Income Tax Credit (EITC)

For the 2011 tax year, the Earned Income Tax Credit (EITC) is available to taxpayers who earned an adjusted income of $49,078. The amount of credit that one qualifies for depends on the age of the taxpayer, the number of dependents and the amount of income. The IRS has an EITC calculator service on their website that can be used to assist taxpayers know the exact amount of EITC that they qualify for. The maximum amount of EITC for 2011 that one can qualify for is $5,751.

Savers Credit

The IRS also provides a credit for taxpayers with a limited income who are saving towards their retirement. The credit is given against contributions to IRA or to other employer managed retirement funds such as the 401 (k). The amount of credit that one qualifies for depends on ones income. Citizens who are nearing the age of retirement also get a higher limit on the Savers Credit.

Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. / Tel:888.321.6188

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