You May Qualify for These Tax Credits

If you have children, you're entitled to claim a tax credit for each one (under the age of 17) on your tax return. In addition, you can claim each child as a dependent, which also lowers your taxes. In addition, the following two tax credits can help you keep more of the money you earn.

Child Care Tax Credit
If you paid someone to care for a dependent child who is age 12 or under, or you pay someone to care for a disabled dependent or spouse so that you could work or look for work, you may be eligible for the credit for child and dependent care expenses. This is known as the Child Care Tax Credit.

For more information, visit the IRS website. IRS Publication 503 has more information about this tax credit.

Earned Income Tax Credit
Another way you may be able to lower your taxes is through the Earned Income Tax Credit (EITC). To qualify for EITC, your annual income must total less than a set amount.

If you have a child or children, you can claim the credit on Form 1040 or 1040A. If you don’t have dependents, you use Form 1040EZ to claim the credit.

For more information, visit the IRS website.

If you expect to qualify for the Earned Income Tax Credit and you have at least one qualifying child, you may be eligible for the Advanced Earned Income Tax Credit. This allows you to receive part of your credit in each paycheck during the year you qualify instead of receiving a lump sum payment at the end of the year. In some states, you also may be eligible for a state EITC Credit. To see which states offer EITC Credits visit http://www.taxsites.com/state.html.

To see if you qualify, ask your employer for Form W-5 and answer the questions on the back of the form. If you meet the requirements, complete the bottom of the form and return it to your employer. Based on your income, your employer adds money to your take-home pay in each paycheck.

For more information, visit the IRS website.

Savers Credit
If you contributed to a retirement plan, such as an IRA or 401(k), and you match certain income limitations, you may be able to take the Savers Credit. This credit is available in addition to any other tax savings that you can take. Visit the IRS website and use Form 8880 to claim the credit.