Five Tax Credits You Should Claim

Tax Act

Five Tax Credits You Should Claim

If you are eligible for these five tax credits, you should claim them this year on your tax return. These credits will reduce the tax your owe directly and some can be refunded to you if you owe no taxes at all.

The Earned Income Tax Credit (EITC) is for lower income earners and considers the number of children that you have when calculating the tax credit. The tax credit is refundable and can give some low income workers up to $6,000 in refundable taxes well beyond what they have paid into the tax system for the year.

The Child and Dependent Care Tax Credit provides up to $3,000 in credit for expenses you paid for a dependent child’s care during the tax year or for a dependent disable spouses care. The credit is designed to allow the taxpayer to work while their loved one is being cared for.

The Child Tax Credit is available for each dependent child a tax payer has and reduces their taxes owed by $1,000.

The Retirement Savings Contributions Credit or the Saver’s Credit helps lower income employees save for retirement. If your income level qualifies you can receive this additional tax credit for contributions you have made to IRAs and 401Ks at work.

The Health Coverage Tax Credit helps to pay for health insurance premiums. The tax credit can pay up to 80% of your premiums. Complete IRS Form 8885 to claim this great credit.

Also take a look at the First Time Homebuyers Credit.

ARRA Provides Tax Benefits to Consumers

ARRA Provides Tax Benefits to Consumers

The American Recovery and Reinvestment Act of 2009 provides a number of tax benefits to consumers that are worth looking into if you fit into one of these categories and can take advantage of the tax credit according to the IRS. Purchasers of cars and homes should look into two of the tax credits and the unemployed get a generous tax credit also.

1. Making Work Pay Tax Credit: Most Americans saw an increase in their take-home pay in early April but should double check their withholding to make sure they are paying enough in taxes.

2. First Time Homeowner Credit: Homebuyers who purchase a home in 2009 can get a credit of $8,000 with no payback requirements.

3. New Vehicle Purchase: If you purchase a automobile in 2009 you can deduct taxes associated with the purchase including sales tax.

4. Unemployment Benefits are Tax Free: Up to $2,400 of unemployment benefits are tax free in 2009.

5. Health Coverage Tax Credit: This credit used to be 65% but has been increased to 80%. More people are eligible now so take a look at the Health Coverage Tax Credit for more information.