As the April 15th tax deadline approaches, the LA News Center urges you to maximize your tax savings by exploring the IRS’s treasure trove of credits. These credits can significantly reduce your tax bill or boost your refund, but not all credits are created equal.
Refundable vs. Nonrefundable Credits: Know the Difference
Refundable Credits: These credits can provide you with a refund even if you don’t owe any taxes. The remaining balance is sent directly to your bank account.
Nonrefundable Credits: These credits can only be applied against the taxes you owe. Once your tax bill is settled, any unused credit cannot be refunded.
This distinction is crucial, especially for nonrefundable credits like the Residential Clean Energy Credit. “Retirees and individuals with lower income may be disappointed when they realize the credit will be carried forward, rather than being returned as a refund,” cautions tax attorney Adam Brewer.
Overlooked Refundable Credits: Don’t Miss Out
The LA News Center has compiled a list of often-overlooked refundable credits:
1. Earned Income Tax Credit (EITC): This credit is available to low- and moderate-income working individuals and families. Use the IRS’s online tool to determine your eligibility.
2. Child Tax Credit: Claim ,000 per qualifying child, with ,600 being refundable.
3. Child and Dependent Care Credit: Deduct up to ,000 to ,000 for daycare or childcare expenses.
Other Tax Credits: A Wealth of Opportunities
In addition to the refundable credits, the IRS offers a wide range of other credits to assist various groups of taxpayers:
- Education Credits: American Opportunity Tax Credit, Lifetime Learning Credit
- Homeownership Credits: First-Time Homebuyer Credit, Mortgage Interest Deduction
- Savings Credits: Retirement Savings Contributions Credit, Coverdell Education Savings Account Credit
- Electric Vehicle Credits: Qualified Plug-in Electric Drive Motor Vehicle Credit
Take Advantage Today
Don’t wait until the last minute. Consult the IRS website or seek professional tax advice to identify all available credits that apply to your situation. By maximizing these credits, you can optimize your tax strategy and secure a healthier financial future.
Data sourced from: ktla.com
