Earned Income Tax
Credit - The Earned Income Tax
Credit (EITC) is a refundable federal income tax credit for working people with
low to moderate incomes who meet certain eligibility requirements. Because it’s
a refundable credit, those who qualify and claim EITC pay less federal tax, pay
no tax or may even get a tax refund. EITC can mean a credit of up to $6,557 for
working families with three or more qualifying children. Workers without a
qualifying child may be eligible for a credit up to $529. To get the credit,
people must have earned income and file a federal tax return — even if they
don’t owe any tax or aren’t otherwise required to file. Taxpayers can use the
EITC Assistant to find out if they are eligible for EITC, determine if their
child or children meet the tests for a qualifying child and estimate the amount
of their credit.
Child Tax Credit - Taxpayers can claim the Child Tax Credit if
they have a qualifying child under the age of 17 and meet other qualifications.
The maximum amount per qualifying child is $2,000. Up to $1,400 of that amount
can be refundable for each qualifying child. So, like the EITC, the Child Tax
Credit can give a taxpayer a refund even if they owe no tax. The qualifying
child must have a valid Social Security number issued before the due date of
the tax return, including extensions. For tax year 2019, this means April 15,
2020, or if a taxpayer gets a tax-filing extension, Oct. 15, 2020. The amount
of the Child Tax Credit begins to reduce or phase out at $200,000 of modified
adjusted gross income, or $400,000 for married couples filing jointly.
Credit for Other
Dependents - This credit is available
to taxpayers with dependents for whom they cannot claim the Child Tax Credit.
These include dependent children who are age 17 or older at the end of 2019 or
parents or other qualifying individuals supported by the taxpayer.
Education Credits - Two credits can help taxpayers paying higher
education costs for themselves, a spouse or dependent. The American Opportunity
Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) are claimed on Form
8863, Education Credits. The AOTC is partly refundable. To get either credit,
the taxpayer or student usually must receive Form 1098-T, Tuition Statement,
from the school attended. Some exceptions apply. See the instructions to Form
8863 for details.
Questions?
Give us a call. We're happy to help!
Amare Berhie, Senior Accountant
(651) 300-4777
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