In our house, tax season is a mixed bag. On the one hand, we’re joyfully dreaming with refund dollars dancing in our heads along with planning how we’ll spend them. On the other hand, we stress about making sure we’ve got our financial house in order and work with frantic haste to submit the paperwork on time. April 15th passes as quickly as it came, and soon the refund check is nowhere to found.
There are a surprising number of tax credits available to us Americans. If you file your own taxes online or even if you pay someone else to do them, there’s a chance you could be missing out on some serious money from the government! There were several on here that I wasn’t aware of when I started researching for this article.
Family & Dependents
1. Child and Dependent Care Credit
If you pay for child or dependent care, you could get up to a 35% credit for those expenses.. Here are the basic rules for qualification:
- The child(ren) that received care are under 13,
- Your spouse is disabled and cannot care for themselves, or
- One of your dependents is disabled and lived with you for more than half the year.
If you paid for care to work or look for work, you may be entitled to this credit. Check out the IRS’ page to learn more.
2. Adoption Credit
If you’re thinking about going through the adoption process, make sure you take advantage of the Adoption Credit, which can provide up to $13,190 for each child, up to three maximum. The credit is reduced if your Modified AGI is between $197,880 and $237,880, and is zero if your Modified AGI is above $237,880.
To understand which adoption expenses are qualified, here’s a summary from the IRS’ website:
…qualified adoption expenses… include:
- Reasonable and necessary adoption fees,
- Court costs and attorney fees,
- Traveling expenses (including amounts spent for meals and lodging while away from home), and
- Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child.
An eligible child is an individual who is under the age of 18, or is physically or mentally incapable of self-care.
Qualified adoption expenses do not include expenses that a taxpayer pays to adopt the child of the taxpayer’s spouse.
Qualified adoption expenses include expenses incurred by a registered domestic partner who lives in a state that allows same-sex second parent or co-parent to adopt his or her partner’s child, adoption expenses and that otherwise qualify for the credit.
3. Child Tax Credit
The Child Tax Credit provides for up to $1,000 per qualifying child. Your child qualifies if they meet this criteria:
- Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
- Was under age 17 at the end of 2014,
- Did not provide over half of his or her own support for 2014,
- Lived with you for more than half of 2014
- Is claimed as a dependent on your return,
- Does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid), and
- Was a U.S. citizen, a U.S. national, or a resident of the United States.
Don’t miss out on this easy-to-qualify-for credit! If you’re unsure whether you would qualify for this credit, the IRS has a tool for Child Tax Credit eligibility, too.
4. Credit for the Elderly or Disabled
This credit ranges between $3,500 and $7,000, and is for people who:
- are 65 and over, or under 65 and retired on permanent and total disability.
- make under a certain threshold ($25,00 married filing jointly AGI or $7,500 of nontaxable income)
If you want to see if you qualify, here’s the IRS tool for the Elderly or Disabled Credit.
5. Premium Tax Credit (Affordable Care Act)
Now that everyone is required to purchase health insurance or pay a fine, if you purchased health care through a federal or state Health Insurance Marketplace, you could be eligible to receive a tax credit for the premiums you paid.
From the IRS:
In general, you may be eligible for the credit if you meet all of the following:
– buy health insurance through the Marketplace;
– are ineligible for coverage through an employer or government plan;
– are within certain income limits;
– do not file a Married Filing Separately tax return (unless you meet criteria which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status); and
– cannot be claimed as a dependent by another person.
Check out this flowchart to figure out if you’re eligible (also from the IRS):
The credit you’ll receive is equal to either your monthly enrollment premiums or the second-lowest-cost-silver-plan (SLCSP) which applies to you, whichever is less. Look up your SLCSP at healthcare.gov to find out how much you could get back in credit!
Income, Savings & Education
6. Earned Income Tax Credit (EITC or EIC)
Depending on how much your Average Gross Income (AGI) is, anyone can qualify for the Earned Income Credit. Here’s how it works in 2015:
- 3 qualifying kids, AGI less than $47,747 ($53,267 married filing jointly), max credit = $6,242
- 2 qualifying kids, AGI less than $44,454 ($49,974 married filing jointly), max credit = $5,548
- 1 qualifying kid, AGI less than $39,131 ($44,651 married filing jointly), max credit = $3,359
- 0 qualifying kids, AGI less than $14,820 ($20,330 married filing jointly), max credit = $503
If you’re not sure whether you’ll get the EITC or not, this tool from the IRS can help you determine if you qualify.
7. Saver’s Credit
Depending on your income level, you can earn up to 50%, maximum $2,000 (married, $1,000 single) of all money invested into a Traditional or Roth IRA as a tax credit through the Saver’s Credit. This also has AGI limits: $30,000 single, $45,000 head of household, $60,000 married filing jointly.
8. Credit for Tax on Undistributed Capital Gain
If you’re invested in a mutual fund or Real Estate Investment Trust (REIT) (learn more about equity in a previous article) and they have paid tax on your capital gain distribution, you can receive credit for it. You’ll know if you qualify for this credit because the mutual fund or REIT will send you the IRS form to include with your return.
9. Lifetime Learning Credit (LLC) and American Opportunity Tax Credit (AOTC)
If you’ve gone back to school, you can receive up to $2,000 every year in tax credits to pay for eligible tuition and related expenses through the LLC
Modified AGI must be less than $64,000 single or $128,000 married.
Check out this table to understand the differences between LLC and the AOTC.
Green Homes & Cars
10. Residential Energy Efficiency Property Credit
Get a tax credit for going green with your home! Receive 30% of total cost in tax credits for any qualified:
- Solar electric systems
- Solar water heaters
- Fuel cell property (other restrictions apply)
- Small wind energy property
- Geothermal heat pumps
11. Plug-in Electric Drive Motor Vehicle Credit
Get $2,500 – $7,500 in tax credits for buying an electric vehicle. Want to know if your dream green vehicle would provide a tax credit? Here’s the checklist:
- Does your car have four wheels?
- Weigh less than 14,000 pounds?
- 4 kWh or greater battery?
- Purchased after 12/31/2003?
If you said yes to all of these, your car should qualify. This credit won’t be around forever, though. The credit begins to reduce for each manufacturer once they’ve sold 200,000 qualified vehicles.
12. Alternative Fuel Vehicle Refueling Property Credit
If the credit for buying an electric vehicle wasn’t enough, you can also get 30% up to $1,000 in tax credits for installing an electric (or hydrogen, etc.) fueling station in your home.
To get an idea of the differences between electric and gas vehicles, check out this infographic.
Adding Up The Savings
These are substantial tax credits that thousands of Americans miss out on every year! Do your due diligence and make sure you claim every one you can.