What are Five Tax Credits That May Reduce Your Taxes?
Posted by William Byrnes on April 16, 2014
In Tax Tip 2014-33, the IRS revealed five tax credits that may reduce a taxpayers taxes. Some tax credits are refundable regardless of whether the taxpayer owes any tax for the year, the IRS pointed out.
1. The Earned Income Tax Credit is a refundable credit for taxpayers who work but do not earn a lot of money. For 2013, the EITC may have increased the tax refund by as much as $6,044.
2. The Child and Dependent Care Credit can help a taxpayer offset the cost of daycare or day camp for children under age 13, and even the costs paid to care for a disabled spouse or dependent.
3. The Child Tax Credit can reduce a taxpayer’s taxes by as much as $1,000 for each qualified child claimed on the tax return.
4. The Saver’s Credit helps workers save for retirement. For 2013, a taxpayer may have qualified if income was $59,000 or less and the taxpayer contributed to an IRA or a retirement plan at work.
5. The American Opportunity Tax Credit can offset college costs. The credit is available for four years of post-secondary education. It’s worth up to $2,500 per eligible student enrolled at least half time for at least one academic period.
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