Joe Garza of Garza & Harris, a prestigious tax law firm in Dallas, Texas goes over three tax credits that almost anyone can take advantage of.
1. Earned income tax credits
The earned income tax credit is there for low to middle income workers, with specific income limits applying to taxpayers depending on the family size. Income limits for single filers ranged from just over $15,000 for those with no children to more than $48,000 for those with three or more children. Married filers with incomes of up to almost $54,000 can claim the credit if they have the maximum family size under the provision.
Those with no children can claim a max credit of up to $510, while larger families with three or more children could see a credit of more than $6,300. Those who claim the credit get an average of $2,445 back from the federal government.
2. Child tax credits
Those with children can also take advantage of the child tax credit. This credit got a big boost in tax reform, with amounts for the 2018 tax year doubling to $2,000 per child.
In order to qualify, a child must be 16 or younger at the end of the tax year and be a dependent who’s related to you. You need to live with the child for more than half the year, and you must provide at least 50% of the child’s financial support in order to claim the credit.
The child tax credit comes in two parts. The primary credit is non-refundable, requiring that you owe tax in order to benefit from it. However, the additional child tax credit is a refundable credit. If you have a minimum of $3,000 of earned income, then the additional child tax credit can boost your refund, even if you have no remaining tax liability. But, current income limits of $75,000 for singles and $110,000 for joint filers apply to the 2017 credit – credits phase out above those initial levels.
3. Deduction for state and local taxes
Unlike the two provisions above, the deduction for state and local taxes isn’t actually a credit. But with a much larger amount at stake, the average deduction of $12,514 amounts to tax savings of between $1,250 and $5,000, depending on your tax bracket. The deduction is available in 2017 for property taxes, as well as your choice of either state and local income tax or sales tax. Only thing is that to claim this break, you have to itemize your deductions on your tax return.