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