Tax Refund
When your employer takes taxes out of your paycheck, the rate at which your income is taxed doesn’t calculate your unique situation. This means that the government often receives more money from your check than they should get. As a result, you may receive a tax refund when you file your taxes at the end of the year. Knowing what can help qualify you for a tax refund is important to maximizing your refund.
Children Credits
When you have children, you may qualify for several credits related to your children. For starters, the child tax credit provides families making less than $110,000 or a single parent making less than $75,000 with a credit of up to $1,000 per qualifying child. A qualifying child is one that lives with you a majority of the year for whom you are responsible for care. If you pay for child care or private school, you can also claim these funds for a credit on your taxes. Credits often result in a refund.
Energy Efficiency Credits
The government is striving to help reserve resources by encouraging homeowners to install energy efficient upgrades in their homes. Some of these upgrades include an energy efficient heating and cooling system, new doors and windows, adding insulation and installing a more energy efficient room. When you install these upgrades, you may be able to claim a certain percentage as an energy tax credit to help increase your refund and make back some of the money you spent on the upgrades. In most cases, this credit equals 10 percent of your costs.
Earned Income Credit
The Earned Income Credit, or EIC, is one meant to help low to middle income families. This credit is available to families that make less than $40,000 and single workers who make less than $14,500. When you file your taxes, your accountant or the software you use will help you figure out whether you qualify and for what amount.
Education Credits
If you or one of your dependents attends college, you can claim an education credit for the tuition you pay. This credit is intended to help those who must pay for their college education to do so without requiring more loans or financial aid. There are actually two ways to take this credit. One way is to claim the lifetime learning credit. The other is to directly deduct your school tuition and fees. If you or a dependent is in college, you need to talk to a tax professional to determine which method will provide you with a greater return. However, the lifetime learning credit can only be claimed once.
Getting the Most
Getting the most out of your tax refund depends on many factors. When you fill out your taxes, it is important to answer all of the questions as thoroughly as possible. If your taxes are more complicated than average, such as if you own your own business or work as an independent contractor, it may be best to use a tax professional. Spending a little money out of pocket can ensure that you get the most out of your tax refund. However, most importantly, if you consistently get large tax refunds, it may be worth adjusting your withholdings to get more back on your paycheck instead of lending it to the government.