Everyone is looking for ways to reduce their tax liability. There are dozens of ways business owners can reduce their taxes, but not necessarily for the average person. The following are 5 big tax credits that you may qualify for without even knowing it.
Earned Income Tax Credit (EITC)
The EITC is one of the best-known credits. It can range from a few hundred to several thousand, depending on the number of children you have and your filing status. The credit will factor in your adjusted gross income, investment income and earned income. You won’t qualify if you can be claimed as a dependent on someone else’s taxes, lived outside the U.S. for 6 months or more, or earned more than $10,000 in investment income. You may be able to claim children up to 24 years of age if certain criteria are met.
American Opportunity Tax Credit (AOTC)
Formerly known as the Hope Credit, the AOTC helps if you’re paying for college expenses that includes tuition and course materials. The allowable amount is determined according to your modified adjusted gross income. Students must be enrolled at least half time and the credit is available on a per-student basis.
Lifetime Learning Credit (LLC)
You can claim this to help offset the costs of post-secondary education, even if you’re not pursuing a degree. It’s available to those within specific income brackets.
Child and Dependent Care Credit (CDCC)
The credit is available to help mitigate the costs of child care services for children under age 13 so parents can work. The credit also encompasses caring for a spouse, parents, or other individual that’s mentally or physically incapable of caring for themselves.
Savers Tax Credit (STC)
Previously known as the Retirement Savings Contributions Credit, it provides a credit if you contribute to retirement plans encompassing a 401(k), investment retirement accounts, and some other types of retirement plans. Age, along with dependent and student status will be factored in.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!