During tax season, you may be able to save thousands of dollars by taking advantage of tax credits. A credit, as defined by the IRS, is a dollar-for-dollar sum that you can deduct from your income tax liability on your tax return. They can be used by qualified taxpayers to lower their tax liability and perhaps boost their refund.
The Seven Tax Credits Are:
Child Tax Credit
Up to $2,000 can be claimed as the CTC for each eligible kid under the age of 17. Households that fulfill all qualifying conditions and file a combined return with an annual income of no more than $400,000 are eligible for the entire amount, according to IRS standards.
Credit for Earned Income Tax
Extremely low-income family members without kids may be eligible for the Earned Income Tax subsidy (EITC), a federal subsidy meant for families with low to moderate incomes with children.
Credit for Dependent and Child Care
According to the IRS, you may be eligible for the Kid and Dependent Care Credit if you paid for someone to look after your kid or dependent so that you and your spouse (if filing jointly) may work, seek for job, or attend school.
Opportunity Credits for Americans
Federal tax credits, known as the American Opportunity Tax Credit (AOTC), are available for qualifying educational costs incurred throughout the first four years of postsecondary education.
Credit for Clean Energy in Homes
If you made an investment in renewable energy sources for your house, such solar, wind, geothermal, fuel cells, or battery storage technologies, you could be eligible for the Residential Clean Energy Credit.
Electric Vehicle Tax Credits
In 2023, if you purchased a brand-new electric car, you may qualify for a $7,500 tax credit. Purchases of new, qualified electric or plug-in hybrid vehicles are eligible for the nonrefundable credit.
