The process of getting your taxes done might not be the most enjoyable, but the reward of getting a great tax refund certainly is. Luckily, there are ways you can ensure that tax refund is just as sweet as you could hope for it to be. Try these tips for getting the best tax credits to work for you (and your refund).
If you’re dreading getting your taxes filed, don’t worry—there are a few perks that can make the process a little more pleasant. By taking advantage of some of the top tax credits available, you can lower your taxes and increase your refund.
Particularly for those falling within the lower or middle range of incomes, these five tax credits can make the difference between a good refund and a great refund.
American Opportunity Tax Credit
This tax credit is an excellent choice for those who are either students or parents of students attending college. If you’re looking for ways to lower the taxes you owe and increase your refund, this is the credit for you. This tax credit is one of the few options that can both lower the taxes you pay, as well as provide you with a refund.
There are a few things to know about this credit:
- It can only be used four times.
- It cannot be applied for graduate degrees or postgraduate degrees.
The restrictions for this credit include:
- An income of less than $80,000 for single or $160,000 if married.
- Must be at least 24 years old to claim (unless both parents are deceased, or you’re married).
Lifetime Learning Credit
This tax credit also applies for educational purposes but is more lenient than the American Opportunity tax credit. However, another difference with this credit is that unlike the AOTC, this credit is non-refundable—that means it can only lower the amount you owe, not provide a refund.
You can qualify for this tax credit if you:
- Are in a graduate program or technical/vocational program.
- Are pursuing additional education for your job.
This credit can lower your tax liability by up to $2,000.
Child and Dependent Care Tax Credit
For those with children or dependents, you may qualify for a specific tax credit. This credit provides a non-refundable tax credit for any payments made towards the care of children or relatives considered dependents.
This credit is non-refundable, meaning it only serves to lower the amount of taxes you owe. Babysitters, after school programs, and tutoring qualifies as deductions for this credit.
Supporting your loved ones can be challenging work at times. With this tax credit, you’ll find a little extra financial support for doing what’s important for you and your loved ones.
Savers Tax Credit
This tax credit was previously known as the Retirement Savings Contributions Credit. This non-refundable credit is available to those who contribute to a pre-tax retirement plan, such as a 401-K or a traditional IRA. Some details you need to know:
- The maximum credit is $1,000 if single, $2,000 if married.
- The maximum income you can make to qualify if single is $32,500 and $65,000 if married.
- The credit can’t be combined with educational credits.
- You must be at least 18 years old to receive this tax credit.
Saving for retirement might not seem like the most fun thing to plan, but when there are tax credits that reward you for it, why not get started on planning ahead? With the Savers Tax Credit, you’ll be reaping the rewards of retirement both in the future and in the current tax year.
Student Loan Interest Deduction
Unlike a credit, which offsets the money you owe, this deduction lowers your reported income—that means, you’ll owe less money. Any interest paid for student loans during a calendar year, such as to OSLA or FEDNET, will be used to offset your gross income.
However, the deductions for this credit tier off as your income increases. The benefits of this credit begin to taper off at an income of $70,000 if you’re single and $140,000 if you’re married. Yet, when it comes to your taxes, any bit helps.
When it comes to getting your taxes done, there are a few offers that can make your refund come back with a little more weight than you expected. Even if you’re simply able to lower the amount of money you’ll pay taxes on, at Community Financial Service Centers, we know how important it is to keep your money where it can do the most good—in your wallet.
And once that refund does come in, CFSC can help you get your money fast with our tax refund services! We can unload a refund that was loaded onto a debit card or we can cash your government refund check. And if you’re feeling especially proactive, you can submit a federal application to have your tax refund direct deposited, getting your cash even sooner! Just stop by or call your nearest CFSC for the details on how we can help you do this. Because there’s nothing wrong with getting your refund early!