Even with the extended tax filing deadline this year, some taxpayers may still have needed…
There’s a good chance that if you are one of many low-income taxpayers, you will file a tax return this year. Preparing that return doesn’t have to cost you most of that refund you’ve been looking forward to.
There are credits specifically targeted toward taxpayers earning less than $50,000 per year. Let’s take a look at four credits that should be on your radar this year.
This credit was originally created as an incentive for people to work. Eligibility and the amount you receive from this credit are determined by filing status and income; specifically your adjusted gross income. To qualify for the credit, you must be between 25 and 65 years old. You also must be either single or married filing a joint tax return. If you qualify, you can earn up to $6,242! A few things to keep in mind before blindly claiming this credit are:
When preparing your tax return with RapidTax, we won’t leave you guessing. We automatically incorporate the Earned Income Tax Credit on your account if you qualify based on the information you entered.
The Lifetime Learning Credit is ideal for those of us who are enrolled in post-secondary education. To qualify for this credit, you must have made tuition/fee payments to the school during the year. Eligibility is also based on income and filing status. Although the maximum amount claimable is 20% of up to $10,000 or $2,000, this credit is not limited to taxpayers in their first four years of school. Not to mention, you do not need to be working toward a degree to claim it.
The American Opportunity Credit is geared more toward those enrolled in their first four years of secondary education who are focusing on. To qualify for this credit, you must have made tuition/fee payments to the school during the year and be enrolled in at least one academic semester per year claiming the credit. It is also available to people earning an even higher adjusted gross income, setting the max at $80,000. The credit will get you 100% of the first $2,000 of qualified expenses plus 25% of the expenses after that. The maximum annual credit is $2,500 per student which makes this credit more beneficial than the Lifetime Learning Credit.
Since claiming both credits is not an option, it is in your best interest to go for the American Opportunity Credit. If you are not eligible, then claiming the Lifetime Learning Credit will most definitely still be useful.
Are you procrastinating going back to work because you’re dreading paying high childcare fees, you may find the Child and Dependent Care Credit to be a lifesaver. To qualify for this credit, you must abide by the following:
This credit will give you up to 35% of qualifying expenses, depending on your adjusted gross income.
As long as your income falls above the income threshold for your filing status, you have to file. For most single people this threshold will be $11,850 and for married couples $20,600. If you are blind, elderly, or filing with a different status, you will have a slightly different threshold. Also, be aware that if you are unemployed, you may still have to file taxes. Unemployment benefits do count as taxable income. You should receive a 1099-G [Certain Government Payments] showing you how much you received and you will have to enter this number on your tax return.
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