7 Credits That Can Lower Your Tax Bill
Tax season will be here before you know it. That is why it is never too early to start working on your taxes and doing what you can to reduce what you owe to Uncle Sam. Anyone interested in making money has to adopt certain habits. One of the most important is learning how to use the tax system to your advantage. You must approach the tax code strategically. And since taxes, like death, are one of life’s unalterable certainties, you should make every effort to get as much advantage from them as you can.
You should view the reduction of your tax bill not as saving money, but as reducing your liabilities. Doing so can be more than just a one off thing. Tax credits can lower in absolute terms the amount of money you owe the government—year after year.
The IRS provides multiple tax credits for low- to moderate-income taxpayers to lower what they owe the government. Unlike tax deductions, which lower your taxable income, tax credits directly lower the amount of money you owe the government.
A tax credit enables you to subtract the amount of the credit from the total taxes owed. The above article goes on to explain 7 tax credits that may be able to lower your bill for the coming year, and years after. They are as follows:
- Lifetime Learning Credit
- American Opportunity Credit
- Retirement Saver’s Tax Credit
- Earned Income Tax Credit
- Child Tax Credit
- Premium Tax Credit
- Elderly and Disabled Tax Credit
Descriptions of each of these credits can be viewed here. But it is worth reviewing a couple of them in this piece.
The Lifetime Learning Credit allows taxpayers or their dependents who are taking post-secondary school courses to claim a tax credit of 20% of their expenses, up to a maximum of $2000. You will definitely have to read the IRS fine print on what exactly qualifies as ‘post-secondary school’, but this credit is a good one to pursue if you or any of your dependents are doing any kind of schooling.
The Premium Tax Credit is for those who purchase health care through the health care exchanges, i.e. Obamacare. This one is certainly worth checking out if you now get your insurance through the exchanges.
Taking advantage of these 7 credits is only one way of lowering your overall tax bill. There are other ways of doing so. And you should get as much help and advice as you need to find them.
About Christopher Reid Chris was born in Washington, D.C. and lives in Britain. He works as a blogger, essayist, and novelist. His first book, Tea with Maureen, has just been published.