How to Save Big with Tax Credits

No one likes paying income taxes. In fact, pretty much everyone who is able to will hire someone to help them sort out these taxes and, in the end, pay the lowest amount possible. With or without a professional, however, you can minimize the amount of taxes you pay by taking advantage of all possible tax credits available. However, you can’t do that if you don’t know about the various credits and how they work, so we’ve provided a rundown of some of the most money-saving tax credits and if and/or how you can take advantage of them.

Credit #1: The Earned Income Tax Credit

The Earned Income Tax Credit, which was established in 1975, is a wonderful way to save money and make those tough working days (which pay off, in the end) a lot easier to get through. You may qualify for this credit if your income falls within a certain pre-determined limit and other factors, such as marital status and number of dependents, also fall in line. The credit is available to eligible persons between 25 and 65, and you can find out if you qualify by checking out the IRS’ website or talking to your financial advisor.

Credit #2: The Energy Credit

If you are a “green” type of person who cares about Mother Nature and taking care of the planet, you can be rewarded for your conservation efforts through various tax credits. There are credits available for making certain approved energy efficiency changes to your home, such as installing solar panels. Before you do anything or file for a credit, speak to a financial advisor to make sure your changes are reward-worthy in the eyes of the IRS.

Credit #3: The College Tuition Credit

If you’re footing the bill for one or more students to attend college, you may be eligible for the College Tuition Credit, also known as the American Opportunity Tax Credit. Even if you have been denied for other tuition-related credits, check this one out since its income limits tend to be higher than other, similar credits. The only drawback is that if you do qualify for and take advantage of this credit, you won’t be able to include tuition and other school-related fees as a deduction, so, for best results, check out each method, and see which one works the best for you.

Credit #4: The Retirement Savings Credit

Finally, if you’re making the effort to save for retirement, no matter what your age, you may qualify for the Retirement Savings Credit, also sometimes known as simply the Saver’s Credit. With this credit, you can deduct contributions to retirement plans, leading to a lower tax bill. As is the case with all of these credits, however, and with any others you may discover, not everyone qualifies, so working closely with your tax advisor is always your best bet for getting all of the savings to which you are entitled and discovering new ones as well. #TaxCredits

Friday, October 23, 2015