Tax Credits That Get You a Larger Refund

When it comes to tax season taxpayers want to get the most they can out of their yearly return. Using tax credits to boost your refund is a great way to get back some of your hard-earned income. It’s important to know about the different types of tax credits available. In this article we will discuss some of the tax credits which can boost your refund.

What Are Tax Credits?

Tax credits have the ability to reduce the amount of federal and state income tax you owe to the government. They are an exact deduction of the income tax that you owe. Some credits are refundable while others are not. Having a refundable credit means that you still receive the credit even if it exceeds your charged amount.

Educational Tax Credits

There are two types of educational tax credits available to taxpayers: The American Opportunity credit, and the Lifetime Learning credit. The American Opportunity credit has the ability to cover up to $2,500 in undergraduate educational costs while the Lifetime Learning credit covers up to $2,000.

Child and Dependent Care Credit

If your child is under the age of 13 or has a disability and is placed with a babysitter or daycare center while you’re at work, you may be eligible to obtain the Child and Dependent Care Credit. This credit allows you to claim back money used to look after the child if the time used is dedicated to your career.

Conclusion

Determining what tax credits most benefit you is vital to maximizing your tax return. Make sure to do careful research to figure out which returns work in your favor.

Image credit: Jonathan Rolande