Don’t ignore tax credits; doing so is like tearing up a check. Every dollar of tax credit equals a dollar in tax savings. That’s better than finding a deduction; if you’re in the 28% income tax bracket, finding a dollars worth of write offs only saves you 28 cents. People miss possible tax credits because of rushing to beat the tax deadline and because these credits usually require filling out extra forms. Taking extra time could mean several hundred dollars in your favor. Here are some common Tax Credits
AMT CREDIT – Did you pay the alternative minimum tax last year?
FOREIGN TAX CREDIT – Did you work in a foreign country or make a substantial income outside of the U.S.?
OVER PAID SOCIAL SECURITY TAXES – Did you have more than 1 employer and make over $113,700 last year?
DEPENDENT CARE CREDIT – Do you pay someone to take care of your under 13 year old child so you can work?
DEPENDENT CHILD CREDIT – Did you have at least 1 dependent child under 17 at the end of the last year?
AMERICAN OPPORTUNITY AND LIFETIME LEARNING CREDIT – The education credit is worthless to your child unless they earned enough to have a tax bill for the year.
ADOPTION CREDIT – Did you adopt a child under 18?
ELDERLY/DISABLED CREDIT – Must be at least 65, retired on permanent and total disability; strict income limits apply.
Ask a tax professional for details about these and other common tax credits.
