March 4, 2006

Do You Get a Tax Credit?

Tax credits are good. They reduce, dollar-for-dollar, the amount of taxes owed. Sometimes, they can reduce taxes so much that the taxpayer ends up with a refund (this doesn't happen with all credits, only those labelled "refundable credits"). Credits include:

The Earned Income Tax Credit -- a refundable credit for low-income working individuals and families. Income and family size determine the amount of the credit. See IRS Publication 596, Earned Income Credit.

The Child and Dependent Care Credit -- credit for expenses paid for the care of children under age 13, or for a disabled spouse or dependent, to enable the taxpayer to work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.

The Child Tax Credit -- credit of up to $1000 for people who have a qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. See IRS Publication 972, Child Tax Credit.

Adoption Credit -- credit of up to $10,630 for qualifying expenses paid to adopt an eligible child. The credit may be allowed for the adoption of a child with special needs even if you do not have any qualifying expenses. See the instructions for Form 8839, Qualified Adoption Expenses.

Credit for the Elderly or the Disabled -- credit is available to individuals who are either age 65 or older or are under age 65 and retired on permanent and total disability, and who are U.S. citizens or residents. (Some income limitations apply.) See IRS Publication 524, Credit for the Elderly and the Disabled.

There are other credits available, so read the instructions for Form 1040 carefully, as well as the IRS information at For more questions, call 1-800-TAX-FORM (1-800-829-3676).
Related Posts Plugin for WordPress, Blogger...