Federal Tax Credits for Family, Home, Work, and School
There are many tax credits that will help reduce your tax burden. Take the time
to learn more about these tax credits now and you may save hundreds, even thousands,
on this year’s tax return. View list of current
tax deductions.
Family Tax Credits
The Earned Income Tax Credit (EITC) is a credit for taxpayers who earn low to moderate
incomes. EITC can reduce your taxes, and can mean a refund. Meaning more working
families and individuals may keep more of what they work for.
The child tax credit allows you to take a deduction against your tax liability if
you care for one or more qualifying children. The child tax credit is in addition
to the credit you receive for child care and dependent child expenses. This tax
credit is meant to provide additional alleviation of the tax burden to parents with
qualifying children. However, there are many tests and limitations on the credit.
Child and dependent care can be very expensive. However, there are certain cases
where you may claim a deduction on family-related expenses if you are in the process
of looking for a job. Depending on the particulars of the situation, you may reduce
your tax by claiming the child and dependent care credit on your federal income
tax return for any expenses related to payments made to someone to care for a child
under the age 13, a qualifying spouse, or a dependent.
You may be eligible for a hybrid vehicle tax credit if you bought a hybrid vehicle
in 2008. For the most fuel-efficient models, the credit can be worth up to $3,000.
The exact amount of the credit is dependent on the make and model of the vehicle
and in what state the vehicle was purchased.
You may be able to take the credit for the elderly or the disabled if you are 65
years of age or older, or if you retired on total and permanent disability and have
taxable disability income. To take the credit, however, your income must not exceed
certain limits.
The adoption credit is designed to help parents with the expenses involved in adopting
a qualified child (including a child with special needs). An eligible child is any
child under 18 or a child that lacks the ability to care for him or herself.
The foreign tax credit was implemented to reduce a double tax burden for citizens
earning income outside of the United States—once by the United States and
again by the foreign country where the income is derived.
Home Related Tax Credits
If you were a first-time homebuyer in 2008, you should know about and begin to plan
for a new tax credit that was recently put into place. This tax credit allows you
to apply a reduction in your tax liability or an increase in your tax return on
the purchase of your first principal residence. The credit acts like a 15-year,
interest-free loan.
If you made energy saving improvements to your home during the year of 2008 you
may be eligible for money saving tax credits. You may be able to take up to 10%
of the amount paid or incurred in energy efficiency improvements to your main home.
Mortgage Interest Credit
Depending on your situation and where you live, there may be a mortgage credit available
to help pay for mortgage interest and principal payments supplied by your state
or local government. To learn more about these credits, search your local government
and state websites for low income housing program details and low income subsidies.
Education Tax Credit
There are two major tax credits available for both new and more seasoned students
continuing their education, the Hope Credit and the Lifetime Learning Credit. Each
credit offers special advantages to students but both credits may not be claimed
by the same student in the same year.
Tax deductions you might qualify for