There are several tax credits that you may qualify for when you file your personal taxes.
Keep in mind that as opposed to a tax deduction, a tax credit is a dollar-for-dollar reduction in the amount of tax you owe. For example, if you owe $5,000 in taxes and you qualify for a $1,000 tax credit, your tax bill will be reduced to $4,000. Tax credits are generally more valuable than tax deductions because they directly reduce the amount of tax you owe.
It’s important to note that tax credits are generally more valuable than tax deductions, but not everyone will qualify for all tax credits or deductions. ,” shared Daniel Ahart, chief tax officer at the tax preparation company Daniel Ahart Tax Service®.
Here are some of the most common tax credits:
- Earned Income Tax Credit (EITC): This credit is designed to help low-income taxpayers. It is a refundable credit that can provide a significant tax refund, even if you owe no tax. The credit amount depends on your income, filing status, and number of dependents.
- Child Tax Credit: This credit is available to taxpayers who have dependent children under the age of 17. The credit amount is up to $2,000 per child, and up to $1,400 of that amount is refundable.
- American Opportunity Tax Credit (AOTC): This credit is available to taxpayers who pay for college expenses. The credit can be worth up to $2,500 per eligible student and is available for the first four years of college.
- Lifetime Learning Credit: This credit is available to taxpayers who pay for college expenses, including graduate school and job training courses. The credit can be worth up to $2,000 per tax return.
- Saver’s Credit: This credit is available to low- to moderate-income taxpayers who contribute to a retirement account, such as a 401(k) or IRA. The credit amount is up to $1,000 for individuals and up to $2,000 for couples filing jointly.
- Child and Dependent Care Credit: This credit is available to taxpayers who pay for child or dependent care services while they work or look for work. The credit can be worth up to $3,000 for one qualifying dependent or up to $6,000 for two or more qualifying dependents.
- Residential Energy Efficient Property Credit: This credit is available to taxpayers who install solar panels, wind turbines, or other renewable energy sources in their homes. The credit can be worth up to 26% of the cost of the installation.
It’s important to note that not all taxpayers will qualify for all of these tax credits. Additionally, there may be other tax credits available depending on your individual circumstances. It’s always a good idea to consult with a tax professional or use tax software to ensure that you’re taking advantage of all the tax credits for which you are eligible.
Remember that every person and every tax return is different, this is just a guide, please find the closest DATS location near you and do not hesitate to contact us. Daniel Ahart Tax Service will be open and ready to answer the phone or in person to clarify any doubts and to be able to guide you in the process,” explains Daniel Ahart, chief tax officer at the tax preparation company Daniel Ahart Tax Service®
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