Income Tax in April

Introduction

Income tax happens every year, and you have to get your taxes prepared and filed before the deadline of April 15. When doing your taxes, you can either choose to do them yourself with one of the many online tax programs such as TurboTax or Tax Act, or hire a tax professional to take care of your taxes.

When filing your income tax there may be several different credits and deductions that you can use to reduce your tax bill or to increase your refund.

Types Of Tax Credits

It is important not to overlook any important credits you can claim on your income tax return. A few common credits that you might be eligible for include the following:

• Earned Income Credit - The Earned Income Credit or the EIC is for working, low-income families. It does not matter if you are single, married or have children, if your income is low enough than you can qualify. For families raising children your EIC will be higher than someone without children.
• Educational Credits - With educational credits you can claim up to $1,500 per student. There are a few different credits a person can claim for education. One such being the HOPE credit which can be claimed after 2 years of post secondary education. You can claim up to $1,000 of tuition among other school expenses plus 50 percent of the following $1,000 in tuition. The Lifetime Learning Credit will give you a maximum credit of up to $1,000.
• Energy Efficient Credits - You can receive a tax credit on certain energy efficient appliances that you purchase. The tax credit is for 30 percent of the cost with no limit on the cost. Rentals do not quality and the credit ends December 31, 2016.
• Child and Dependent Care - Working families can save on the cost of child care and receive a credit if they have to pay someone to watch their child while they are working. You can receive a maximum of $2,400 for one child and $4,800 for two or more. There are exceptions to this credit. The person taking care of your child can not be under 19 or be able to be claimed as a dependent by you.
• Dependent Care Credit - If you are caring for a disabled or older person you may be able to claim the Dependent Care Credit.
• Social Security Credit - When you start working in a job you will begin to earn Social Security Credits. You will receive one credit for every $890 of earnings up to 4 credits a year. You will remain receiving credits even if you change your job or end up without a job. If you delay receiving Social Security when you reach retirement age than you can claim the Social Security Credit up to 5.5 percent each year that is delayed.

Tip

When doing your income tax on your own you should gather up all the necessary documents and forms that are required. Some documents that you may need are W2s, 1099s, proof of alimony or jury duty pay, social security statement, dividend and interest statements, brokerage statements, retirement distributions, K-1 statements, health care expenses and child care, mortgage interest paid, etc. It is a good idea to make copies in case you need them in the future.

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