A tax credit is designed to help you reduce the tax payments that you need to make. The primary difference between a tax deduction and tax credits is that deductions reduce your adjusted gross income, while tax credits are applied to your tax bill. For instance, if you owe $300 in taxes but qualify for a credit that's worth $500, you'll obtain a check for the $200 difference. When you're getting ready for tax season, knowing what tax credits you qualify for may assist you in paying less than you initially thought you would.
Child and Dependent Tax Credits
Most tax credits are available for individuals who have children or dependents to support. For instance, the child tax credit offers up to $2,000 for any child who qualifies, which is designed to offset some of the many expenses that occur when raising a child. A credit of up to $500 is also available for anyone you can list as a dependent on your taxes.
Tax Credits Applicable to Employees or Workers
The main tax credit for workers and employees is the earned income tax credit, which is available to people who earn low or moderate incomes. This credit is designed to provide relief to working individuals and families who don't earn a substantial amount of income. The foreign tax credit provides a reduction in the double tax problems that individuals facing when earning money outside of the U.S.
Education Tax Credits
Whether you're a new or continuing education student, there are two tax credits you might qualify for, which include the lifetime learning credit and the American opportunity credit. Both of these credits offer benefits to students for each year of college or continuing education. When you are experiencing difficulties in filing your taxes or are unsure about the types of credits that you qualify for, you should consider contacting a tax accountant in Las Vegas to help you resolve these issues.