Hi, I’m Bette Hochberger, CPA, CGMA, and we will review various tax credits on today’s #TaxTipTuesday. Tax credits are fantastic because they, dollar for dollar, reduce the amount of tax you owe, and sometimes they generate a refund. We are reviewing the Child Tax Credit, Recovery Rebate Credit, Earned Income Tax Credit, Lifetime Learning Credit, American Opportunity Credit, Child and Dependent Care Credit, Saver’s Credit, and Adoption Tax Credit.
How do I know if I qualify? You must go to a great tax preparer like a CPA or Enrolled Agent! Ask the right questions, visit the IRS website, and check your income level!
The child tax credit is typically for parents with children under the age of 18. However, there are some exceptions for adult children aged 18-24, depending on their college attendance and how much of their expenses the parents are paying.
The recovery rebate credit is a credit given to you if, for some reason, you did not receive your economic impact payment and were entitled to one. An excellent way to check this is to go to the IRS website and print your transcript.
The earned income tax credit is a credit for those who make low-medium amounts of income. Here is a fantastic EITC Table from the IRS website. Be careful claiming this one, as I have noticed an uptick in fraud surrounding this credit.
The lifetime learning credit is for those in college with higher-education costs. The credit is worth 20% of the first $10,000 you pay for college. Related to this credit is the American opportunity credit worth $2,000.
The child and dependent care credit are for households where you are paying for dependent or child care because you are working or trying to work. Watch the video for more information about this one.
The savers credit is for adult, independent individuals who contribute to IRAs or 401K. This is mainly for people who are on the lower spectrum of income.
The adoption tax credit is a huge credit that I have made a video about before, but be sure to watch the video to see any updates.
As always, stay safe, and we will see you next time!