Here Are Nine Popular Tax Credits to Save You More in This Tax Season

While many deductions were cut or modified with the Tax Cuts and Jobs Act (TCJA) of 2017, most tax credits were retained. Tax credits are more powerful than tax deductions because they directly subtract from your tax bill (deductions only reduce taxable income). Refundable tax credits are even better since refunds can be greater than your tax bill.

Explains Betterment Head of Tax Eric Bronnenkant, “Credits are, in general, more valuable than deductions, because they reduce your taxes dollar-for-dollar.” Do you qualify for any of the following nine tax credits?

1. Earned Income Tax Credit (EITC) – One of the most popular and powerful tax credits available to low-income families, the EITC allows up to $6,431 in refundable credits (for married couples filing jointly) for those who have three or more qualifying children.

2. Child Tax Credit (CTC) – In exchange for eliminating personal deductions, the TCJA doubled the child tax credit that’s non-refundable to $2,000 per qualifying child under age 17. Modified adjusted gross income (MAGI) phaseouts were also increased to $200,000 for single filers and $400,000 for married filing jointly.

3. Credit for Other Dependents – The TCJA created a new $500 non-refundable credit for dependents who are not otherwise qualified for the CTC – including dependent children beyond the age of 16 and elderly parents/grandparents.

4. Additional Child Tax Credit (ACTC) – The ACTC is a refundable supplement to the CTC for those who don’t owe enough taxes to claim the full CTC credit. It allows qualifying taxpayers to claim up to $1,400 in additional credits that extend beyond the taxes that they owe. You’ll need Schedule 8812 to see if you qualify.

5. American Opportunity Credit (AOC) – This credit may be claimed against qualified education expenses up to a $2,500 annual limit per qualifying student – and the AOC can be partially refundable (up to 40%).

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Source: CBN