Three Income Tax Credits That Can Help you Stomach Tax Season

Posted By: Matt in Taxes on 02/13/2015 at 12:10:55

Income tax time is a time of headaches and stress for people who will owe taxes. It can be a time of rejoicing for people who are eligible for refunds, however. Taxpayers who do not have an excessive income can qualify for certain credits and deductions that can help them to obtain refunds. The following are some common income tax credits that can place a taxpayer on the refund side of a yearly return:

Earned Income Credit

Earned income credit is perhaps one of the most popular credits that taxpayers seek. They can receive a refund of $503 to $6,242 if they meet the qualifications. To qualify for earned income credit, the taxpayers must not select the "married filing separately" filing status. All other statuses will qualify the taxpayer for EIC. The taxpayer must have earned income to qualify for EIC, as well. Earned income can come from a business or by working with a regular employer.

Educational Credits

Several educational credits are available for taxpayers who went to college during the year. One example of an educational credit is the tuition and fees deduction. The tuition and fees deduction provides a taxpayer with a deduction of up to $4,000 for tuition expenses. To qualify for the tuition fees and deduction credit, the taxpayer must earn less than $160,000 if he or she is married or less than $65,000 for the unmarried person.

Some taxpayers can take a deduction of up to $2,500 for the interest on their student loans. To qualify for the deduction, the person must have an annual income of less than $150,000 if he or she is married and $60,000 if unmarried. Additionally, only certain tax forms allow the deduction.

Business Credits

A taxpayer can take many credits if that person owns a business. Examples of some business expenses that one can claim are electric bills, automobile expenses, and traveling expenses. A business owner can claim business credits in one of two ways. The person can use the standard $1,500 credit that does not require extensive calculation. Alternatively, the person can complete a long form and itemize all of his or her business deductions. Itemizing the deductions may be better for someone who has many yearly business expenses.

Several other income tax credits are available. The taxpayer can started with the previously mentioned deductions and then search for additional credits.

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