Do You Qualify For These Common Tax Credits?

January 5, 2009 By Trisha Wagner

As you look in your rear view mirror and wave goodbye to the end of the holiday season you can now focus on the next bump in the road. Before you know it tax season will be in full swing and now is the time to determine if you can reduce your income tax liability by claiming some common tax credits.

• Child Tax Credit. You might be able to reduce the federal income tax you owe up to $1,000 for qualifying children under the age of 17. Several factors determine if a child is eligible- a few of which are: age, relationship to you, citizenship, support provided and if the child has lived with you over half of the year. Depending on your income level and number of children this tax credit may result in a refund.

• Child and Dependent Care Credit. To be eligible for this tax credit you must have a child or qualifying dependent who receive paid care while you are at or looking for work. The child or dependent adult must be physically or mentally incapable of taking care of themselves. There are other factors that are considered when determining eligibility for this tax credit.  Your income level, the payee (cannot be someone you claim as a dependent or a person under the age of 19), your filing status, if the dependent lives in your home and any other dependent care benefits you receive will all be taken into consideration.

• Residential Energy Tax Credit. Tax credits for for energy efficient home improvements (windows, doors, roofs, insulation, HVAC, etc.) which had previously expired in 2007 are now applicable for 2009. Keep in mind you will not be able to use this tax credit for improvements made in 2008, however if you have any plans for improvements in the upcoming year they will be eligible.

• Credit for Retirement Savers. If you are over 18 and contributing to a 401(k), IRA, or other tax favored retirement plan you may be eligible for the retirement plan savers tax credit. Based on your adjusted gross income (AGI) and amount of contributions you made you may be able to trim up to $1000 off your tax bill. (Note: full time students are not eligible for this tax credit.)

 These are just a few of the common tax credits available. Tax time will come and go just like the holiday seasons, however being ill prepared for this time of year can cost you considerably more.

Posted in holidays, taxes

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