Earned Income Tax Credit
The [Earned Income Tax Credit (EITC)] will be a very helpful medium for you if you are the kind who generates a relatively low to moderate income. It does this by minimizing the amount of tax that you owe. However, in order to be eligible, you would need to meet some specifications. You would be also required to file a tax return even when you are not necessarily supposed to, or if you aren’t owing tax. You are likely to get the refund you want provided the EITC minimizes the tax to less than zero.
Who Qualifies for the EITC?
- You become eligible for the EITC if you meet the following specifications:
- If you have a child that actually meets all the rules on your behalf/ your spouse (that is if you file a joint return);
- You meet all the rules for people who do not have a qualifying child
- You have generated income and also adjusted your gross (income) within specified limits
Simply meet some specified laid-down rules:
There are special resources that have been given by the [Internal Revenue Service (IRS)] which cover the EITC.
In case your child meets the requirements or if you qualify yourself, you can utilize the [EITC Assistant] to get your filing status as well as the specific amount of credit that you would receive.
In the scenario where both you and your spouse happen to be non-resident aliens, then check out [Publication 519, U.S. Tax Guide for Aliens] and discover how you could qualify for the EITC.
Energy Tax Incentives
You should take note; you can really save a significant amount of cash on utility bills if you buy appliances that are energy-efficient. Likewise, adhering to general energy rules and adopting the smallest energy-saving methods can all contribute in small but sure ways. Tax incentives, along with rebates and tax credits have also been made available on energy-saving mediums. The following databases can enable you get vital info that helps you check your eligibility by state, locally, and even nationally.
- [Database of State Incentives for Renewables and Efficiency (DSIRE)]
- [DSIRE: Federal Incentives/Policies for Renewables and Efficiency]
- [Department of Energy (DOE): Tax Credits, Rebates, and Savings]
- [Offers and Rebates from Energy Star Partners]
Federal Tax Deductions For Charitable Donations
When you give to a [501(c)3 organization], you could get deductions on taxes from the federal government, However, you are required to file an itemized tax return, with a form 8283 (non-cash donations) and Schedule A before deductions can be made on your donation.
Note that you can lay claim to fair market values on your taxes should you choose to donate non-cash. Also, the amount money that can be deducted on the taxes may not necessarily be the same as the overall amount of the donations you made.
For instance, if you had donated a farm truck, the deduction would be reliant on whether the truck is actually used by the agency or bought away at an auction. The “[A Donor’s Guide to Vehicle Donation]” is a publication made by the IRS which elaborates on exactly how the deduction is reached, as well as the necessary documentation you are required to have to take the deduction.
Another instance: If you had given money to a charity and got a present in return, the total amount isn’t tax deductible. However, the figure that is in excess of the gift’s value remains the only portion of the donation that you are qualified to make a deduction on with regards to your federal income taxes.
Though you might never be required to send records of your donations along with tax returns, it is prudent to keep records as they are deemed good to add to the records of your tax. Some of these documents are listed below for you:
- [Written acknowledgement] sent for the donation of vehicles
- Statement of annual giving from the charity
- A credit card statement displaying information about the payment to the organization
- A receipt from the non-profit organization.
- [Valuations] of the artwork, stocks real estate (,etc) that you have donated to the non-profit or the charity
- The list of items that you have donated
- Vehicle identification number for vehicles donated.
- Signed-over vehicle title.
- A cancelled check to the non-profit organization or charity.
- The organization’s confirmation sent to you via email
- (In cases where you sent via SMS) The phone bill
Also, here are some vital details that could be in the statements and the receipts:
- The organization’s name
- The date the donation was made
- The amount that was given by you
- An issued statement citing that the organization offered you no return services
- The Vehicle identification number (VIN) in the cases of vehicle donations.
Mortgage Debt Forgiveness
Despite the fact that debt that has been cancelled is usually still taxable, owners of households with [mortgage debt partly or entirely forgiven during tax years 2007 through 2012] may pass as rare participants in this case.
Mortgage Forgiveness Debt Relief Act
The US Mortgage Forgiveness Debt Relief Act (of 20007) provides some significant inputs to consider people for the forgiveness of mortgage debt. The following are the details:
- For any married individual who is filing an exclusive return, the limit stands at $1 million.
- Any proceeds from the refinanced debt that has been used for pay off card debts and the like are not eligible to be excluded.
- In order to be eligible, the debt incurred should have been used to purchase or significantly boosted your main residence; it must also be secured by the named residence.
- Proceeds from refinanced debts that have also been significantly used to improve your main place of residence passes to be excluded too.
- You cannot take away debt that has been minimised via the restructure of your mortgage or debt that is forgiven in a foreclosure.
- For those who had mortgage debt partially or totally forgiven from the 2007-2012 tax years could be able to exclude up to $2 million.
You can use this [Interactive Tax Assistant (ITA)] (on IRS.gov) to check if you have had your mortgage debt cancelled.
Also, fill [Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness] in case you are eligible for a unique exclusion package. After completion, add the form the income tax return for the year the eligible debt was forgiven.
Tax Benefits For Education
Numerous tax benefits are currently present to aid clear out the rising cost of expenses that are encountered particularly in college education and beyond.
What the education credit does is reduce the tax that you previously owed on your return. You are eligible for a refund when the credit goes down to below the zero mark.
Two man credits are primarily present in terms of education:
This education credit is given to cater for expenses of the qualified student in higher education. This is covers the initial 4 years and the figure currently stands at a yearly (maximum) of $2,500.
This type of credit is in place for tuition and all other linked expenses that are to be paid for the qualified students (in higher education). It covers bills for the following education areas: professional degree programmes, undergraduate as well as post-graduate programmes. Unlike the first option, the time limit for taking this credit is unlimited.
The amount of tax that you are required to pay will be reduced as a result of the deduction which is in place to lower the amount of income that you have, subjected to tax.
Many forms of deductions are present with regards to education. They include:
- Student loan interest deductions
- Qualified student loans
- Qualified education expenses
- Deduction on Tuition and fees
There are savings plans that actually make way for your compiled earnings to develop more money (free of tax) until the cash is withdrawn. Also there are some plans that make room for your concentrated tax-free money to be distributed.
Two primary forms of savings plans exist currently:
These particular qualified programs are sponsored by various groups including colleges. Under the Internal Revenue Code’s section 529, these tuition programs are endorsed to make meaningful contributions to a designated account that is in place for the payment of the expenses of students’ higher education.
The Coverdell Education Account was instituted to assist both students and their parents to save money for further expenses in the education arena. However, this account type can be successfully employed for the payment of a qualified student post-secondary and K-12 expenses, unlike the 529 Plans.
Scholarships and Fellowships
Typically, a figure that is given to an institution for the benefit of a student in the given institution, meant to aid in academic achievement, falls under a scholarship. However, a fellowship refers to a designated amount of money which is given to help the student in the research program.
The scholarship or the fellowship that is given could be free of tax or otherwise depending on whether the student is a candidate for a degree program, as well as the amount being paid.
Exclusions From Income
Some forms of educational help benefits can be taken out from your income, and preventing any tax on those as a result. Even so, this would imply that you won’t be able to enjoy any other deduction using your tax-free expenses as grounds for access. In this case, you potential miss out on a lifetime learning credit too.
Valuable information and tax benefit tools are provided by the IRS for the education sector.
Check out the [Tax Benefits for Education: Information Center] for different forms of benefits you can enjoy on taxes and the conditions that make you eligible for their applications.
The [Interactive Tax Assistant] tool can help you figure out whether you qualify for deductions or credits. Some of the credits available to be checked are the lifetime learning credit and the American opportunity credit.
Tax Relief In Disaster Situations
Of course, whenever there are disasters, both businesses and homes are all affected in one way or another. This is why the IRS gives unique [tax law provisions] to give affected parties the extra hand to be able to financially break through from the adverse effects of an unforeseen emergency. In typical [federally-declared disaster areas], quicker refunds are available by filing an [amended return] to retrieve losses on your previous year’s tax return.
The IRS offers [guidance for those affected by disasters], including tax filing procedures and ways to amend one’s returns.
For more info on tax relief in adverse situations, [contact the IRS]