Tax Credits

Tax Credits that can save you big $$

Courtesy of Andrwe Stadler, EA

It that time of the year, tax time, everyone is getting started on their tax return. Here is a great tax tip for you; there are hundreds of federal and state tax credits picking the ones you qualify for are tricky most are confusing to understand. Tax credits help reduce the taxes you owe. Some credits are refundable, meaning even if you owe no tax, you may still get a refund.

Here are five of the most common tax credits:

1. The Earned Income Tax Credit is a refundable credit as much as $6,143. You may be eligible for the credit based on the amount of your earned income, your filing status and the number of children in your family. Single workers with no dependents may also qualify for EITC.

2. The Child and Dependent Care Credit can help you offset the cost of daycare or day camp for children under age 13. You may also be able to claim it for costs paid to care for a disabled spouse or dependent.

3. The Child Tax Credit can reduce the taxes you pay by as much as $1,000 for each qualified child you claim on your tax return. The child must be under age 17 in 2014 and meet other requirements.

4. The Saver’s Credit helps workers save for retirement. You may qualify if your income is $65,000 or less in 2014 and you contribute to an IRA or a retirement plan at work.

5. The American Opportunity Tax Credit can help you offset college costs. The credit is available for four years of post-secondary education. It’s worth up to $2,500 per eligible student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify.

6. ObamaCare Tax Penalty Exemptions can save you hundreds of dollars. To be eligible there are special rules and procedures you need to comply with.

Be sure to hire a licensed tax professional, an Enrolled Agent, America’s Tax Expert an expert who specializes in Individual and small business taxes.

Check the preparer’s qualifications -- Make sure your preparer is qualified. The states of IN and IL do not required Tax Preparers to be Licensed, and per IRS, over 60% of tax preparers do not have any license credentials. There are two types of licensing – CPA, licensed by the state board of accountancy, and Enrolled Agents, licensed by US Dept. of Treasury.

Check the preparer’s history -- Check your preparer’s history by conducting your own research through various sources: Enrolled Agent www.inea.bizor CPA society www.incpas.org.