Americans are looking for any chance to possibly boost their refunds as inflation remains at record high rates, as tax season is fast approaching.
Experts revealed the potential ways you could reduce your federal tax bill or even get a much larger refund by thousands this year.
You should look out for credits that will bring you hundreds if not thousands back in cash, and if you are eligible for any tax credits, it can reduce the amount of earning tax you owe to federal and state governments.
You should consider the tax credits listed below.
1. Earned Income Tax Credit
This year, low to moderate-income employees and families will look at the earner’s income tax credit.
It offers a maximum of $600 if you are eligible as a taxpayer with no children.
On the other hand, the credit will become greater if you have children.
Maximum amounts are as follows :
- One child: $3,995
- Two children: $6,604
- Three plus children: $7,430
These amounts are boosted from the maximum amount of $6,935 last year.
To see if you qualify for the credit, go to the IRS and you’ll also be able to see how much you could receive.
2. Saver’s Credit
Just like the EITC, the Saver’s credit also wants to give a boost to those with low to moderate incomes.
Called the Retirement Saving Contribution Credit, it will give taxpayers as much as 50 percent of contributions on their retirement accounts.
Increased by $2,500 from last year, this year taxpayers will see this credit end at $36,500 for single filers.
For married couples that filed jointly, a boost of $5,000 to $73,000 boost from last year.
3. Child Tax Credit
The child tax credit this year will remain at the original $2,000 per qualifying child because the credit is not adjusted for inflation.
A qualifying part must have an adjusted gross income of $200,000 or less if filing as head of households, single, or married filing separately.
On the other hand, if you are married and filing jointly, the amount increases to $40,000.
If your income is high, a credit will be lowered by $50 for each $1,000 of additional income.
4. Adoption Credit
This credit for 2023 returns will be set at $15,950 for every child.
Adoption credit can be obtained after finalizing your adoption and after you claimed your adopted child as a dependent.
The purpose of the credit is to help parents with their expenses related to adopting a child, be it a US citizen child or one from another country.
5. Credit for the Elderly and Disabled
This applies to taxpayers who are aged 65 or older or are retired in permanent and total disability and received taxable disability income.
In addition, recipients must have an adjusted gross income or a total nontaxable social security pension.
Credits range from $3,750 and $7,500.
6. Lifetime Learning Credit
This credit goes toward qualified tuition and related expenses for eligible students at schools.
This credit can help you pay for undergraduate, graduate, and professional degree courses.
When it comes to the number of years there is no limit to what can be claimed.
7. American Opportunity Tax Credit
A Credit for qualified education expenses paid for eligible students in their first four years of higher education.
$2,500 per eligible student can be claimed.
You can have up to 40 percent of any remaining amount of the credit if the credit brings the amount of tax you owe to zero.
Then, 25 percent will be claimed of the next $2,000 of eligible education expenses you paid.
8. Energy Tax Credit
In 2023, those who own electric vehicles will have a tax credit.
For new vehicles, you could get $7,500 off if you earn under $150,000 as a single filer and $300, 000 if filed jointly
To be eligible, your car must cost less than $55,000.