We're more than halfway through the year. School has started. And before we know it, we'll be celebrating Thanksgiving and Chrsitmas. Thank goodness we have until Monday, April 17, 2017 to file our individual taxes. So, now is the time to start planning and getting ready. Here are some tax tips to help you get started.
Generally, tax deductions reduce your taxable income. Tax credits reduce your tax liability usually dollar for dollar. In some cases, you'll get a tax refund if your tax credit exceeds your tax liability. And, in other cases, the tax credit is limited to your tax liability. With some deductions, the tax credit phases out if your income exceeds a certain threshold. Because tax laws change, it's important to speak with a tax professional to file your taxes. Otherwise, you may pay too much or too little in taxes. Here's a list of some tax credits.
1. Earned Income Credit - is available for low to moderate earned income taxpayers with or without qualifying children. It's a refundable credit which means if the credit exceeds your tax liability, you may be entitled to a refund for the difference.
2. Child and Dependent Care Credit - you may be eligible for a 20 to 35% credit of your child care expenses.
3. Elderly and Disable Credit - is available to individuals 65 years of age or older subject to certain conditions.
4. Child Tax Credit - you may eligible for a child tax credit up to $1,000 per child under the age of 17. It's a refundable credit with certain restrictions.
5. Education Credit - if you, your spouse and or your dependents have incurred tuition expenses, you may be eligible for a credit of $2,500 per student per year or $2,000 per tax return. Certain conditions apply.
6. Foreign Tax Credit - if you paid taxes to a foreign country in which you earned income, you may be eligible for a tax credit against your US taxes.
7. Adoption Credit - if you plan or have adopted a foreign or US citizen less than 18 years of age, you may be eligible for a nonrefundable tax credit less than or equal to $13,460.
8. Excess FICA Credit - if you work multiple jobs, you may have paid too much FICA tax. And, may be eligible for a refund of excess FICA tax paid.
9. Saver's Credit - you may be eligible to take a tax credit for contributions made to your IRA or Employer-Sponsored retirement plan.
10. Energy Tax Credit - is limited to a lifetime nonrefundable credit of $500 for residential taxpayers who purchase energy efficient water heater, furnace, boiler, heat pump, air conditioner, building installation, windows and roof. You will not be eligible for this credit, if you have taken it in a previous year for other purchases. Other tax credits, rebates and savings may be available through the US Department of Energy.