Tax credits are different from deductions in that unlike deductions (which reduce the amount of income you're required to pay tax on)—credits lower the actual amount of tax you need to pay.
Most are for low or moderate income individuals and families, but if you qualify—the Consumerist Tax Cat says: Don't overlook them!
Here is information about 6 tax credits that you may qualify for, and how to get them, from the IRS:
1) Earned Income Tax Credit
This credit s for low to middle-income workers and their families. Working families who make less than $39,783 and childless workers with incomes under $14,590 may qualify. To help figure out if you qualify for this credit, click here.
2) Child Tax Credit
If you've got a kid under 17, you probably qualify for this credit, says the IRS. This credit is in addition to the deduction that you take for each dependent and is different from the "Child Care Credit." Questions? Click here.
3) Education Credits
If you're enrolled at least half-time in a post-secondary school, you may be able to take the Hope credit or the lifetime learning credit. Watch out, the IRS says, you can't deduct your tuition and fees and take these credits, so be careful to choose the right one. To figure out if you qualify for these credits, click here.
4) Child Care Expense Credit
If you have a child under 13 who you pay someone to care for, you are probably able to take this credit, says the IRS. You may also qualify if you have a dependent who requires care who is older than 13, so read the rules carefully. Form 1040 filers claim the credit for child and dependent care expenses on Form 2441 (PDF). Form 1040A filers claim it on Schedule 2.
5) Saver's Credit
If you have a low or moderate income and you've contributed to a 401k or IRA, you may be eligible for this credit. If you've made less than $26,000 for singles and married people who are filing separately, or $39,000 for heads of household, or $52,000 for joint filers, you might be able to take this credit. If you haven't made any contributions yet, don't worry—you've got until April 15, 2008.
6) Energy-Saving Credit
If you've made energy-saving improvements on your home (and didn't take this credit in 2006) you may be eligible for up to $500 in credits. Energy-saving improvements include things like new insulation, better windows, water heaters, doors, etc. Click here. (PDF)
(Photo:chadwbecks)
]]>And I looked into the EIC credit, but the impression I got (and what t he IRS website also told me) was that I had to be 25 to get that credit, and sadly I'm only 24. :(
]]>Actually, I'm curious about the IRA credit too -- I'm going to be opening a Roth IRA this week, but will my contributions made before April 15 count towards the 2007 or 2008 limit?
]]>I'm not exactly clear on the #5 issue... in 2007 I worked as a temp starting in April before going full time in July and immediately contributing to their 401K. I'm sure I'm under $26K for the year, and I think I've contributed about $600 in that period to 401K.
However, my CONTINUED contributions until April 15th still count towards that savings sum, but my earnings DON'T count towards the income? (how does THAT work?!)
This is why I have people to do my taxes. This is way too difficult.
]]>Don't forget that if you had someone living with you all year or most of it who was not working or worked very little, and you provided more than half their support for the year, you may be able to claim them as a dependent even if they are not your child or even related to you. I was able to claim my partner while he was in grad school. Review the rules for deciding who qualifies.
]]>No, it specifically does not include CFL's (I just did mine in TurboTax last weekend and it actually said it does not).
I did, however, get $55 for my new front door, which I replaced not to save energy, but because I could no longer open it from the outside.
]]>@gfinakoma: Same here - it's second only to our mortgage.
]]>I LOVE the tax cat!!
Meooow!!
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