It’s the time of year again which you probably dread – tax season!  Forking over your money to the government is no fun. Paying federal income taxes helps support the infrastructure and services most of us need and/or use every single day. The tax credits used to reduce the amount you owe, however, can say quite a bit about you.  

Tax Credit Types

Tax credits are taken after first determining your taxable income, then figuring out how much you owe through the annual tax table. Unlike deductions – which reduce the amount of your income that is taxable – tax credits can save you the same amount they are worth, dollar for dollar, reducing the amount you actually owe to Uncle Sam. The good news is that you can claim as many tax credits and deductions as you are eligible for, but be aware that some may be restricted by certain factors like  income or age. The following covers the two types of tax credits available: refundable and nonrefundable.   

  Discover which little-known individual tax credit uniquely matches you, and check if you are eligible to use it to boost the amount of your tax refund on your next filing.   Now, on to the good stuff!

GENEROUS & CHARITABLE

Your sense of philanthropy and kindness brightens the lives of everyone around you, so go ahead and reap what you sow! Try cashing in on your good karma with the following tax credits.

Adoption Tax Credit

For those who want to expand their families through adoption, expenses can be overwhelming. this tax credit can be used to get a substantial amount of money back, provided the conditions are met.  

PRUDENT & GOAL-ORIENTED

You’re smart, driven, and tend to make decisions based on how to best advance your future. You’re obviously savvy enough to try adding something special to your next tax return with the credits you’re eligible for.

Lifetime Learning Tax Credit

This is available for all years of undergraduate and graduate-level education – without restrictions on tax years. Professionals can even take advantage of this credit to improve their job skills with continuing education courses or certifications.

American Opportunity Credit

Although only partially refundable on your return, this tax credit is available for students to cover tuition and fees for a limited four years of postsecondary enrollment.

Excess Social Security & RRTA Tax Withheld

This refundable credit really benefits those who worked for two or more employers and may have had too much Social Security tax withheld. It’s also extremely useful for railroad workers who had excess tier 1 and tier 2 railroad retirement (RRTA) withheld. This refundable credit offers the chance for a refund, possibly even if you’ve had no tax withheld.

Saver’s Credit

A great option for non-student, low- and moderate-income workers to potentially help credit part of their contributions to IRS-recognized accounts (examples may include an IRA, 401K, 403B, 457B, or others). The less income you earn, the greater your tax return might be.  

CULTURED & WELL-TRAVELED

With some traveling under your belt, you’re an adventurous nomad who can’t be tamed. You’re likely to travel to an exotic location for some relaxation time, or maybe even make a small foreign investment. This exciting tax credit could possibly reflect your present or future plans.  

Foreign Tax Credit

If you have ever worked in a country outside of the U.S, (or simply have international investments which you paid taxes on), you could be eligible for this tax credit. It works by reducing the tax burden of having to pay double taxes by crediting you for taxes paid to foreign countries.  

CREATIVE & ENLIGHTENED

Your artistic mind is often deeply understanding of the world surrounding you, meaning you’re more likely to have thought about hands-on ways to upgrade your life. Energy-efficient projects could interest you as you look for long-term solutions to saving money and perhaps even improving the environment.

 

Green Energy Credits

There are a range of credits under the umbrella commonly known as “green energy.” These can range from tax credits for residential energy efficiency improvements like insulating your home’s windows and doors, to purchases of wind energy properties, solar water and electric systems, and more. Who knew earth-friendly home improvements could pay off so well?  

Death & Tax Credits

To quote one of the great American Founding Fathers, Benjamin Franklin, “In this world nothing can be said to be certain, except death and taxes.” In its own cynical, somewhat twisted way, having to pay taxes at least means you’re still alive. So, suck it up, buttercup. Instead of mourning the fate of your money, infuse some fun into your tax preparation and improve your refund odds with tax credits!