Taxes:
The Top 10 Tax Credits Everyone SHOULD Know
1. Earned Income Tax Credit (EITC)
The EITC is designed to benefit low to moderate-income working individuals and families. The credit amount depends on your income, filing status, and the number of qualifying children. It's a refundable credit, meaning it can result in a tax refund even if you owe no taxes.
2. Child Tax Credit (CTC)
The CTC provides a credit of up to $2,000 per qualifying child under the age of 17. The credit is partially refundable, allowing you to receive up to $1,400 as a refund if the credit exceeds your tax liability. The credit phases out at higher income levels.
3. American Opportunity Tax Credit (AOTC)
The AOTC offers a credit of up to $2,500 per eligible student for qualified education expenses during the first four years of higher education. Up to 40% of the credit (up to $1,000) is refundable. It covers tuition, fees, and course materials needed for attendance.
4. Lifetime Learning Credit (LLC)
The LLC provides a credit of up to $2,000 per tax return for qualified tuition and related expenses. Unlike the AOTC, the LLC is available for all years of post-secondary education and for courses to acquire or improve job skills. The credit is non-refundable.
5. Child and Dependent Care Credit
This credit helps offset the cost of child care or care for a dependent while you work or look for work. The credit ranges from 20% to 35% of qualifying expenses, with a maximum of $3,000 for one dependent or $6,000 for two or more dependents.
6. Retirement Savings Contributions Credit (Saver’s Credit)
This credit encourages low to moderate-income taxpayers to save for retirement by providing a credit of up to 50% of contributions to an IRA, 401(k), or other qualified retirement plans. The maximum credit is $1,000 ($2,000 for married couples).
7. Adoption Credit
The adoption credit provides a non-refundable credit of up to $14,890 per child for qualifying adoption expenses, such as adoption fees, court costs, and attorney fees. The credit is subject to income limits and phases out at higher income levels.
8. Premium Tax Credit (PTC)
The PTC helps eligible individuals and families cover the cost of health insurance purchased through the Health Insurance Marketplace. The credit amount is based on your household income and the cost of the premiums. You can receive the credit in advance to lower your monthly premiums or claim it when you file your tax return.
9. Residential Energy Efficient Property Credit
This credit incentivizes homeowners to install energy-efficient systems, such as solar panels, wind turbines, and geothermal heat pumps. The credit is equal to a percentage of the cost of the property and can significantly reduce your tax bill.
10. Electric Vehicle (EV) Tax Credit
The EV tax credit provides up to $7,500 for the purchase of a new electric vehicle. The credit amount depends on the battery capacity of the vehicle and phases out once the manufacturer sells a certain number of qualifying vehicles.
