TAX CREDITS OF INTEREST TO SISTAPRENEURSEach year thousands of taxpayers claim a variety of tax credits for which they are eligible. Tax credits are valuable in that they are a dollar for dollar reduction of taxes owed. Some credits are even refundable— meaning your taxes could be reduced to the point where you could receive a refund rather than simply owe less tax. Five of the most common credits are discussed below:1. The Earned Income Tax Credit (EITC)—a refundable credit for low income working families and individuals. Income and family size determine the amount of the credit that you qualify for.2. The Child and Dependent Care Credit— for expenses paid to day care providers or other caregivers for the care of children under 13 or a disabled spouse or dependent (can include a parent or other elderly family member) to allow the taxpayer to work or look for work.3. The Child Tax Credit—for people who have a qualifying child. The maximum amount of the credit is $1,000 per qualifying child under the age of 17. In certain circumstances, you can also claim an “additional” child tax credit.4. The Retirement Savers Credit— a credit for taxpayers who contribute to an IRA or employer-sponsored retirement program (e.g., 401(k)). Income and filing status determine the maximum amount of the credit that you qualify for.5. The First Time Homebuyer’s Credit— new for tax year 2008, applies to individuals who purchased a new home on or after April 9, 2008 and before July 1, 2009, if the buyer has had no ownership interest in a principal home in the US in the three year period prior to the purchase of the home. The credit is equal to the lesser of $7500 or ten percent of the purchase price of the home.
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