Best Credits Available to Taxpayers
By Tim Frye
Everybody wants a little credit. When you work hard, you want it from your wife. When your son hits a jumper, he wants it from you. When you wife finally cooks up a decent meal, she wants it from you. Well, the tax game is no different. When you are settling up with the IRS, you want your credits. Credits can be an extremely powerful antidote to taxation, because they can eat away at your tax liability dime for dime, and can even give you money back once liability reaches zero, if the credit is considered refundable. Lets go through the top credits and their benefits.
Earned Income Credit
This may seem like an obvious choice to anyone who knows anything about taxes. The Earned Income Credit is the most valuable refundable tax credit in the game right now. The EIC is an anti-poverty program that saw it's genesis in the early seventies during the Jimmy Carter administration. For those taxpayers who report poverty level income, and have dependents, the credit can pay up to almost $6,000 back to the individual. Their are a few requirements to gain access to the EIC. The taxpayer and the dependents claimed must have social security numbers. The dependents must also fall under the guidelines defining the qualifying child or qualifying relative requirements. As the credit states in its name, the key is that taxpayer have a certain amount of EARNED income to qualify for the credit.
Child Tax Credit
The child tax credit is accessible to taxpayer claiming children who are under the age of 17 by the end of the tax year in question. It is refundable under the surname of the Additional Child Tax Credit, and it can pay up to $1,000 for each qualifying child. To claim the credit, you must be able to claim the child as a dependent. Essentially, the taxpayer must be related to the dependent to be able to access the credit, and their income must be above poverty level to receive the entirety of it's benefit.
American Opportunity Credit
The American Opportunity Credit is offered to those taxpayers who have expenses relating to their first four years of post-secondary education. The credit can allow up to $2,500 of the first $10,000 of school expenses to be refunded to the taxpayer. This is a superior credit, because it will offer a sense of solace and relief to those students looking to get their bachelors who on most occasions have little income to rely on so far in their young lives. The partial refund of their qualifying expenses can definitely keep them motivated to finish school and move up in the world, which was obviously the Government's intention.