When it is the time of taxes, everyone has the same approach of saving money as much as possible. You have to follow the ways out of which you can maximize the savings and be eligible for tax credits. When you have tax credits, you will get the reduction in the overall tax bill. The reduction may affect the taxable income and save you a lot of money within the tax rate.
You can learn about top 6 tax credits here with additional information. The credits which are refundable tend to have additional value and the taxes beyond it matters a lot. There are limits for the non-refundable credits which is why you have to set the limit of taxes.
You can check out the top 6 tax credits which are suitable according to your situation and pick the best ones for yourself. You can file it either this year or the next year with knowing the right details of each.
EITC
The Earned Income Tax Credit helps the people with low income. The low-income people who are supporting their families as well come under the EITC. It is a great refundable tax opportunity which you have to claim.
You have to be a citizen of US with the earning income; you need to have social security number, any investment income which is less than $3400 annually. If you are married then you have to file jointly for EITC otherwise you cannot file separately. If you are single, then you can file it on the single basis with mentioning your dependents.
The income through EITC does not support children with the single filers. There is a limit scale for income for the couples and the single parents. It is predicted that the limits will not increase in the coming years with the tax changes.
CTC
Child tax credit is non-refundable tax credit which is available for your children. You can get up to $1000 per child with this tax credit. Each season, when you file for the taxes, there will be additional $1000 for every child specifically. The child needs to fall under certain criteria to be eligible for such payment like the age, support, relationship, citizenship of US, residence area and dependency on the family income.
It is predicted that the amount will increase to $2000 in the next 4-5 years with the tax changes. You can save this money every year for the child’s education which they have to proceed so that they do not have to get into the loans in future. You can save a lot from the tax returns which is why it is recommended that you prefer to take action ahead of time.
NDC
Non-child dependent credit is when you get the $500 for the child which is non-refundable. Children under the age of 17 are eligible for this credit. You can claim it as a parent and keep it in the savings for the child.
CDCT
Child and dependent care tax credit are related to the ones which are mentioned above. It adds up the total points for the child, and there are chances that you may get the return up to $3000. It depends how many children you have which are dependent upon you and are not working as a teenager.
Education Tax Credit
These are for the deduction of fees and related expenses for the child. You can save for the tuitions through this money when you file it. You do need to mention the institution which is qualified and valid.
RSC
Retirement savings contribution tax credits are known to be for the people who are retired. There are up to 50% of the part which IRA plays for the retired people. When you apply in the retirement plan while working, you can get the incentive back from IRS as the tax return upon filing.
If you are not sure which one fits your situation, then it is better to take help from the tax preparer. He will be able to guide you in the best way, and you will find ways to get the source of best tax credits.
