Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to point that a taxpayer would receive a refund rather than owing any taxes. Below are some of credits taxpayers could be eligible to claim:
Earned Income Tax Credit
This is a refundable credit for low-income working individuals and families. Income and family size determine amount of EITC. When EITC exceeds amount of taxes owed, it results in a tax refund to those who claim and qualify for credit.
Child and Dependent Care Credit
This is for expenses paid for care of children under age 13, or for a disabled spouse or dependent, to enable taxpayer to work. There is a limit to amount of qualifying expenses. The credit is a percentage of those qualifying expenses.
Adoptive parents can take a tax credit of up to $10,390 for qualifying expenses paid to adopt an eligible child. A credit of up to $10,390 may be allowed for adoption of a child with special needs even if you do not have any qualifying expenses. For more information, see Pub. 968, Tax Benefits for Adoption.
Credit for Elderly and Disabled
This 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 citizens or residents. There are income limitations. For more information, see Pub.524, Credit for Elderly or Disabled.