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With April 15 nearing, we want to make sure you are aware of what claiming tax credits might mean for your family. There are many credits taxpayers may take for various life events that often go overlooked. Below are just a few credits specifically for families, listed on the Internal Revenue Service site (www.irs.gov).
The Earned Income Tax Credit (EITC), sometimes called the Earned Income Credit (EIC), is a refundable federal income tax credit for working individuals and families who earn low incomes. Congress originally approved the tax credit legislation in 1975, in part to offset the burden of Social Security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. The EITC may be for you, if:
To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.
The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.
Child and Dependent Care Credit
If you paid someone to care for a child 12 years old or younger so you could work, you may be able to reduce your tax by claiming the credit for child and dependent care expenses on your federal income tax return. The credit is also available if you paid for care of a spouse or a dependent of any age who is physically or mentally incapable of self-care.
The credit is a percentage, based on your adjusted gross income, of the amount of work-related child and dependent care expenses you paid to a care provider. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
Child Tax Credit
With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under age 17. A qualifying child for this credit is someone who:
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:
For more information on these and other tax credits and updates for 2012, go to www.irs.govor the following resources:
Volunteer Income Tax Assistance:A free assistance program, run by the IRS and staffed by volunteers. 1-800-829-1040 or www.irs.gov
National Women’s Law Center: 202-588-5180 or www.nwlc.org
Center for Budget and Policy Priorities: 202-408-1080 or www.cbpp.org