As tax season approaches, it’s important to take advantage of all the deductions and credits available to you. While some credits, like the Earned Income Tax Credit, are well-known, others may not be as widely recognized but can still provide significant savings. In this article, we’ll highlight four tax credits that you don’t want to overlook as you prepare your taxes.
- Child and Dependent Care Credit: If you pay for childcare or care for a dependent adult, you may be eligible for the Child and Dependent Care Credit. This credit can provide a credit of up to $3,000 for one dependent and up to $6,000 for two or more dependents. To qualify, the care must be necessary for you (and your spouse, if you’re married) to work or look for work.
- American Opportunity Tax Credit: If you or a family member is paying for higher education, you may be able to claim the American Opportunity Tax Credit. This credit can provide a credit of up to $2,500 per student for the first four years of post-secondary education. To qualify, the student must be enrolled at least half-time in a degree or certificate program and have not completed the first four years of post-secondary education as of the beginning of the tax year.
- Lifetime Learning Credit: If you or a family member is paying for higher education, but do not qualify for the American Opportunity Tax Credit, you may be eligible for the Lifetime Learning Credit. This credit can provide a credit of up to $2,000 per tax return, regardless of the number of students in the household. To qualify, the student must be enrolled in a course at an eligible educational institution.
- Energy-Efficient Home Improvement Credit: If you made energy-efficient home improvements in 2020, you may be eligible for the energy-efficient home improvement credit. This credit can provide a credit of up to $500 for certain energy-efficient upgrades like insulation, windows, and HVAC systems.
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Remember, these tax credits are not refundable, which means that they can only be used to offset the amount of taxes you owe, not to increase your refund. Additionally, you should check with a tax professional or the IRS for the most up-to-date information and understand the full qualifications for each credit.
In conclusion, don’t overlook these four tax credits as you prepare your taxes. They can provide significant savings and help you keep more of your hard-earned money. These credits are the Child and Dependent Care Credit, American Opportunity Tax Credit, Lifetime Learning Credit, and Energy-Efficient Home Improvement Credit. Be sure to check the qualifications and rules for each credit as they can change from year to year.
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