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The purpose behind personal tax credits is to reward you for certain actions that you take throughout the year by allowing for what are essentially bonus tax deductions. Rather than working as deductions, these tax credits work as guaranteed refunds when you file for your taxes the following year. There are a myriad of different personal tax credits that you may qualify for, and becoming well-versed with them is the best way to determine whether or not you qualify.
Energy Saving
There are a number of tax credits offered for energy saving practices. If you replace windows, skylights or storm windows with more energy efficient options, you can get a credit of 10% up to $200. The same goes for the replacement of exterior doors and storm doors up to $500. Installing insulation will result in a 10% tax credit up to $500.
A >14 SEER HVAC replacement will result in a $300 tax credit. Installing a geothermal heat pump system will result in a 30% credit up to as much as $2000. Solar water heating system installation will result in the same 30% credit. There are numerous other tax credits for energy saving installations and features that you may qualify for as well. There is even a small tax credit that you can take advantage of just for buying energy efficient Compact Fluorescent light bulbs for your home.
In order to qualify for these tax credits associated with energy efficiency in your home, you are going to need to be able to furnish proof of the energy efficient steps that you took on your home, including receipts to show the costs involved in the improvements. If you cannot furnish proof that you made the necessary alterations, you may not qualify for the credit.
Higher Education Tax Credit
Most college students are eligible for a tax credit of as much as $2,500 dollars as part of a stimulus package put in place by the government. Students who are in college or university can get a tax credit of as much as $2,500 based on filing as a student and detailing books, college tuition and supply costs. Keeping good records is important in order to quality for this tax credit. In order to qualify, you have to be a student on at least a part time basis, you have to have at least $2,500 worth of expenses that are not already being covered by financial aid or scholarships and you have to make less than $80,000 per year in income.
Car Donation Tax Credit
If you donate a working vehicle to charity, then you may also qualify for a tax credit. It is important to keep the paperwork you receive from the charity on file. Reporting the donation on the IRS Form 8283 is what will allow you to claim this tax credit if you do qualify. If you donate your vehicle late in the year, the tax credit may not apply until the following year.
Personal Tax Credits: Do You Qualify?
