2010 Federal Tax Credits
No matter the year, there are many tax credits that you can take advantage of. Even if you do not qualify for any of them, it is important to know what they are. Tax credits can help you pay for everything from going to college to raising a family and much more. Unfortunately, thousands of taxpayers overlook their potential tax credits every year.
While tax deductions are a good thing, they do not save you nearly as much money as tax credits. With a tax deduction, you are lowering the amount of income on which your income tax is calculated.
Below are some of the most common federal tax credits available for 2010:
1. Earned Income Tax Credit
This tax credit is designed to help low-income workers and families. A family with total income less than $39,783 will usually qualify for the Earned Income Tax Credit. In many cases, disability retirees are also eligible.
2. Child Tax Credit
Do you have a dependent under the age of 17? If so, there is a very good chance that you qualify for the Child Tax Credit. This tax credit can be as much as $1,000 per eligible child. To make it even better, you can use it alongside the traditional $3,400 tax exemption for each dependent. Remember, the Child Tax Credit is not the same thing as the Child Care Credit.
3. Child and Dependent Care Expenses Tax Credit
Do you pay somebody to take care of your child while you go to work? If the child is under the age of 13 and claimed as your dependent (on your income tax return), you are more than likely eligible to get the child care credit. This tax credit can also be taken if you pay somebody to care for an elderly parent or spouse, who needs this type of assistance.
4. Education Tax Credits
As a parent or student you may require help paying for college or other post-secondary education. In this case, the Lifetime Learning Tax Credit and Hope Scholarship Tax Credit are two options to consider. The Hope Tax Credit is for eligible students enrolled with at least a “half time” status. The Lifetime Learning Tax Credit, on the other hand, is available even if you are only taking one class. (Note: You are not able to deduct tuition and fees and take an education credit simultaneously ? you have to choose one or the other.)
Now that you know more about the 2010 Federal tax credits you should be in better position to lower your tax liability. If you are eligible for any of the tax credits listed above you don’t want to miss out on the savings.