When you are filing your taxes, it is important to make sure that you take full advantage of the tax credits that are available. Government tax credits can significantly reduce your tax burden. Whether you are a small business owner or a full-time student, there are government tax credits that can benefit your situation.
Here are some of the top tax credits that you can use to your advantage when you are filing your taxes.
The Retirement Savings Contributions Credit
If you take advantage of a 401(k) and other retirement accounts by making contributions, you may be able to claim a tax credit of up to $1,000 for the contributions that you make. Couples who are filing jointly can claim up to $2,000 for their contributions.
American Opportunity Credit
Those who are students should take advantage of the American Opportunity Credit. This credit can be used to help students in covering tuition payments and educational supplies. Students must maintain half-time status to claim this credit.
Student Loan Interest Deduction
Those who are already repaying student loans may also enjoy certain tax benefits. The IRS allows those who are repaying student loans to claim student interest as a deduction.
The Dependent Care Credit
The Dependent Care Credit can be used to cover the costs of childcare. Those who must hire a caretaker or daycare service for their children should be sure to take advantage of this credit. Family members who are in the position of providing care for a disabled loved one or individual who is mentally incompetent can also use this credit.
Earned Income Tax Credit
The Earned Income Tax Credit is a great tax credit that is available to those who have a valid Social Security number and also earn an income. This tax credit can provide financial relief for those who are self-employed and filing taxes. If one has investment income, he or she may not qualify for the credit.
The Home Office Deduction
Those who work from home may also be able to claim certain business deductions. If you are self-employed and do all of your work in a home office, you may deduct expenses related to the rental costs for that space. You may also deduct a certain percentage of the utility costs for that room.
These are the top deductions that you can claim to provide you with financial relief when you are filing your taxes. Taking advantage of these deductions may help eliminate any taxes that you owe to the IRS.
Information credited to ADP.com.
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