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When filing your income tax return, a federal tax credit can substantially reduce the amount of your federal tax liability. A tax credit is an event or activity that reduces the actual amount of tax that you owe; it is different that a tax deduction – which only reduces the amount of your taxable income. Congress authorizes tax credits, and there are hundreds of federal tax credits currently enacted. In fact, most taxpayers are eligible for one tax credit or another; however, with so many available, it is often difficult to determine which ones you may eligible for.
Types of Available Tax Credits
There are many federal tax credits available; some are available for individuals and some are made available to businesses. Tax credits are offered in conjunction with many events or activities, and it is important to know which types you might be eligible for.
There are tax credits available for lower income workers and families that were created to offer tax relief for workers that are in the lowest incomes. For example, the earned income tax credit allows low income workers to take home more of their pay by reducing the amount of the tax that is owed and withheld from their paychecks. This type of tax credit can be applied for at any time, and the person eligible for the credit does not need to wait until filing his/her income tax return before seeing the benefits of the tax credit.
There are other tax credits which assist people with child and dependent care expenses as well as help offset the cost of college tuition and continuing education. In addition, there are tax credits for the elderly and disabled that assist taxpayers in those vulnerable groups. There are also tax credits for US citizens residing overseas that earn a living and pay taxes in a foreign country. Additionally, the United States government offers a tax credit towards retirement savings contributions that you make during the year. And, there are many more types of tax credits available.
Determining Eligibility for Tax Credits
Almost every tax for player is eligible for one tax credit or another; however, which tax credits are eligible for will depend entirely on your individual situation. For instance, if you have children you will be eligible for tax credits related to taking care of and raising your children. Obviously, if you don't have children, then you cannot claim these types of tax credits. However, there may be others that you are eligible for such as education or retirement account tax credits. In short, there is no way to tell each individual which federal tax credits he/she may be eligible for. In fact, many times taxpayers will need to find out what types of tax credits their eligible for - on their own.
The Internal Revenue Service offers many guides and publications that can help taxpayers determine what type of tax credits they are eligible for; the IRS’s website at www.IRS.gov has resource material available just for that purpose. So, if you're having trouble determining what type of tax credit as you may be eligible for, the IRS website should be one of your first stops.
Federal tax credits are your right under the law, and provide a way to substantially reduce the amount of tax that you owe to the federal government. However, it is up to you to find out which tax credits you are eligible for, and to apply them to your own individual federal income tax return.
Types of Available Tax Credits
There are many federal tax credits available; some are available for individuals and some are made available to businesses. Tax credits are offered in conjunction with many events or activities, and it is important to know which types you might be eligible for.
There are tax credits available for lower income workers and families that were created to offer tax relief for workers that are in the lowest incomes. For example, the earned income tax credit allows low income workers to take home more of their pay by reducing the amount of the tax that is owed and withheld from their paychecks. This type of tax credit can be applied for at any time, and the person eligible for the credit does not need to wait until filing his/her income tax return before seeing the benefits of the tax credit.
There are other tax credits which assist people with child and dependent care expenses as well as help offset the cost of college tuition and continuing education. In addition, there are tax credits for the elderly and disabled that assist taxpayers in those vulnerable groups. There are also tax credits for US citizens residing overseas that earn a living and pay taxes in a foreign country. Additionally, the United States government offers a tax credit towards retirement savings contributions that you make during the year. And, there are many more types of tax credits available.
Determining Eligibility for Tax Credits
Almost every tax for player is eligible for one tax credit or another; however, which tax credits are eligible for will depend entirely on your individual situation. For instance, if you have children you will be eligible for tax credits related to taking care of and raising your children. Obviously, if you don't have children, then you cannot claim these types of tax credits. However, there may be others that you are eligible for such as education or retirement account tax credits. In short, there is no way to tell each individual which federal tax credits he/she may be eligible for. In fact, many times taxpayers will need to find out what types of tax credits their eligible for - on their own.
The Internal Revenue Service offers many guides and publications that can help taxpayers determine what type of tax credits they are eligible for; the IRS’s website at www.IRS.gov has resource material available just for that purpose. So, if you're having trouble determining what type of tax credit as you may be eligible for, the IRS website should be one of your first stops.
Federal tax credits are your right under the law, and provide a way to substantially reduce the amount of tax that you owe to the federal government. However, it is up to you to find out which tax credits you are eligible for, and to apply them to your own individual federal income tax return.
