Tax Credits for 2019
EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. The maximum EIC for one qualifying child is $3,250.00, for two qualifying children is $5,372.00 and for three or more qualifying children is $6,044.00
Tax credits, deductions and savings plans can help taxpayers with their expenses for higher education.
A tax credit reduces the amount of income tax you may have to pay.
- A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.
- Certain savings plans allow the accumulated earnings to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both.
- An exclusion from income means that you won't have to pay income tax on the benefit you're receiving, but you also won't be able to use that same tax-free benefit for a deduction or credit.
You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. The credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income. Work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work.
For purposes of the child and dependent care credit, a qualifying individual is:
- Your dependent qualifying child who is under age 13 when the care is provided,
- Your spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the year, or
- Your dependent who is physically or mentally incapable of self-care, and who has the same principal place of abode as you for more than half of the year. For this purpose, whether an individual is your dependent is determined without regard to the individual's gross income, whether the individual files a joint return, or whether you are a dependent of another taxpayer.
For both the credit and the exclusion, qualified adoption expenses, defined in section 23(d)(1) of the Code, include reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging while away from home) and other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child. An eligible child must be under the age of 18, or be physically or mentally incapable of caring for him- or herself.
Qualified adoption expenses do not include expenses that a taxpayer pays to adopt the child of the taxpayer's spouse. Qualified adoption expenses include expenses incurred by a registered domestic partner who lives in a state that allows same-sex second parent or co-parent to adopt his or her partner’s child.
The HCTC made health insurance more affordable for eligible individuals and their families by paying a significant portion of qualified health insurance premiums for tax years 2002 through 2013.
Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2012 and the years ahead, according to the Internal Revenue Service.
The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.
The saver’s credit can be claimed by:
- Married couples filing jointly with incomes up to $57,500 in 2012 or $59,000 in 2013;
- Heads of Household with incomes up to $43,125 in 2012 or $44,250 in 2013; and
- Married individuals filing separately and singles with incomes up to $28,750 in 2012 or $29,500 in 2013.
For more information about each tax credit, click here >> to the IRS website.
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