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Five Important Tax Credits
IRS
Tax Tips TT-2009-43, March 4, 2009. Check it out! You might be eligible
for a tax credit. A tax credit is a dollar-for-dollar reduction of taxes
owed. Some credits are even refundable. That means you might receive a
refund rather than owe any taxes.
Here
are five popular credits you should consider before filing your 2008
Federal Income Tax Return:
1.
The Earned Income Tax Credit
is a refundable credit for low-income working individuals and families.
Income and family size determine the amount of the credit. For more
information, see IRS Publication 596, Earned Income Credit.
2.
The Child and Dependent Care Credit
is for expenses paid for the care of your qualifying children under age
13, or for a disabled spouse or dependent, to enable you to work or look
for work. For more information, see IRS Publication 503, Child and
Dependent Care Expenses.
3.
The Child Tax Credit
is for people who have a qualifying child. The maximum amount of the
credit is $1,000 for each qualifying child. This credit can be claimed in
addition to the credit for child and dependent care expenses. For more
information on the Child Tax Credit, see IRS Publication 972, Child Tax
Credit.
4.
The Retirement Savings Contributions Credit,
also known as the Saver’s Credit, is designed to help low- and
moderate-income workers save for retirement. You may qualify if your
income is below a certain limit and you contribute to an IRA or workplace
retirement plan, such as a 401(k) plan. The Saver’s Credit is available in
addition to any other tax savings that apply. For more information, see
IRS Publication 590, Individual Retirement Arrangements (IRAs).
5.
Health Coverage Tax Credit
Certain individuals, who are receiving certain Trade Adjustment
Assistance, Alternative Trade Adjustment Assistance, or pension benefit
payments from the Pension Benefit Guaranty Corporation, may be eligible
for a Health Coverage Tax Credit when you file your 2008 tax return.
There are other credits available to eligible taxpayers. Since many
qualifications and limitations apply to the various tax credits, taxpayers
should carefully check their tax form instructions, the listed
publications, and additional information that is available on the IRS Web
site at
IRS.gov. IRS forms and publications
are also available by calling 800-TAX-FORM (800-829-3676).
Links:
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1040 Central
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Publication 596, Earned Income Credit (EIC) (PDF
281K)
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Publication 972, Child Tax Credit (PDF
128K)
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Publication 503, Child and Dependent Care Expenses (PDF
167K)
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Publication 524, Credit for the Elderly and Disabled (PDF
140K)
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Publication 970, Tax Benefits for Education (PDF
368K)
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Publication 590, Individual Retirement Arrangements (IRAs) (PDF
449K)
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Form 1040 Instructions (PDF
1,101K)
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