Six Major Tax Credits to Help Maximize Your Refund
New York, NY -- (SBWIRE) -- 01/22/2013 -- eTax.com, one of the premier websites for online tax preparation, wants people to be aware of six tax credits that can maximize their 2012 refunds. Tax credits are dollar-for-dollar reductions of the total tax owed. Some are refundable which means that, if you are eligible and claim one, you can get the rest of it in the form of a tax refund – even if you have no tax liability!
“Tax credits are very important to be aware of, especially when it can mean you will get a big refund check,” said Paul Stanley. “We want people to know about these credits and taxpayers can take advantage of them when they submit their returns on eTax.com.”
Here are six tax credits to consider on your 2012 federal income tax return:
1. The Earned Income Tax Credit (EITC) is for people earning less than $50,270 from wages, self-employment or farming. Many workers saw their earnings drop in 2012, so they may qualify for the first time this year. Income, age and the number of qualifying children will determine the amount of the credit, which could be up to $5,891. Workers without children may qualify as well.
2. The Child and Dependent Care Credit is for your expenses paid for the care of qualifying children under age 13 – or for a disabled spouse or a disabled dependent – while you work or look for work.
3. The Child Tax Credit is for families with a qualifying child. The maximum credit is $1,000 for each qualifying child. You can claim this tax credit in addition to the Child and Dependent Care Credit.
4. The Retirement Savings Contributions Credit, known as the Saver's Credit to some people, is designed to help low-to-moderate income families save for retirement. You may qualify if your income is below a certain limit while you are contributing to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver's Credit can be added to any other tax savings that apply.
5.The American Opportunity Credit is up to $2,500 per eligible student and available for the first four years of post-secondary education. 40% of the credit is refundable, so you can receive up to $1,000, even if you owe no taxes. Students must be pursuing an undergraduate degree or other recognized educational credential and be enrolled at least half-time for at least one academic period.
Qualified expenses include tuition, fees, course-related books, supplies and equipment. The full credit is typically available to eligible families or individual taxpayers who have a modified adjusted gross income less than $80,000 – or $160,000 for married couples filing a joint return.
6. Lifetime Learning Credit can be up to $2,000 per eligible student and it is available for all years of post-secondary education, as well as for courses to acquire or improve job skills. The maximum credit is limited to the amount of tax you pay on your return. The student does not – again, does not – need to be pursuing a degree or other recognized education credential.
Qualified expenses include tuition and fees, course-related books and supplies. The full credit is normally available to eligible taxpayers with a modified adjusted gross income of less than $60,000 or $120,000 for married couples filing a joint return.
For more tips and information, visit eTax.com.