Credits can be applied to people of lower-income groups. When a person is an eligible citizen of the United States, he can earn well by applying for a tax credit. A tax credit is usually subtracted from the total payable , added, and credited to your account. But you need to meet and fulfil certain criteria to be eligible for the credits, which can be better told to you by a team of professionals. There are many credits as per the US Law, which is as follows:
- Child tax credit- A child credit can range as follows:
- $2000-$3600- for a child under the age of 6
- $2000-$3000- for a child between 6 to 16
- Nowadays, 17-year-olds will also be eligible for the $3000 child credit.
- American Opportunity Tax Credit
This credit is usually applicable for students taking post-graduate education for the first four years. Every student is eligible to get $2500 for course fees, tuition fees, and book materials. If you want to get hold of the full credit, your annual gross income should be $80,000 and $1,60,000 when you are married and filing jointly.
Parents with a dependent child aged between 19 to 24 can additionally charge a $500 credit. You may consult with a professional (whom includes a tax credit attorney) who’ll help you guide better in credits.
- Saver’s Credit
Saver’s credit is usually for people who have contributed to their retirement accounts. For mid and low-income groups, a person can get $1000 and $2000 for married people and file jointly. However, if your gross salary is above $68000 for 2022, you won’t be eligible for this tax credit.
Saver’s credit should not be mixed with Standard Deduction as via Standard Deduction; your taxable amount can be greatly reduced. However, you’ll be eligible for the Saver’s credit if you have made contributions to the 401 (k) and IRA.
Suppose your income is $20,000, and you have made contributions of $1000 in an eligible account, then you’ll get $500 as the tax credit. And if you have contributed $2000 to an eligible account, you’ll get $1000 as the tax credit. Contact experts (including San Jose attorney) to get help to get credits.
- Income Tax Credit
You’ll be eligible for the income credit when you have a standard gross Income within certain limits. But to be eligible for this, you must apply for the yearly Income . The EITC can be credited by minimizing your tax amount to zero.
For filing an earned income tax credit, you’ll be eligible:
- If you fulfil all the rules without a qualifying child
- If you fulfil the rules with a qualifying child or meet the criteria entitled in case of a married couple filing jointly
Living in the US for people having lower-salaried amounts is quite difficult. Research suggests that a family should earn twice the amount to meet the federal poverty threshold. For a family of 4 consisting of 2 children, an income below $51,852 is considered below the poverty line. You must consult with tax consultants to know more about the benefits.