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1 October 2018 / Individuals

What are tax credits?

1 October 2018 > Individuals

Whereas tax deductions reduce the amount of taxable income subject to the income tax bracket, credits reduce your tax liability dollar for dollar after your income tax liability has been calculated. Some credits, such as the earned income credit, are refundable (as opposed to non refundable), meaning that you will receive the excess amount of the credit as a refund if the credit exceeds your entire tax bill.

Credits are generally created to encourage and reward certain behaviors that have been deemed beneficial by the government. There are a wide variety of credits geared towards separate initiatives.

Do I qualify for tax credits?

Each credit has its own set of rules and qualifications assigned to it. The following credits apply to individuals. Click on the relevant credit to see if it applies to you.

Family and dependent credits

  1. Earned Income Tax Credit

  2. Child and Dependent Care Credit

  3. Adoption Credit

  4. Child Tax Credit

  5. Credit for the Elderly or Disabled

Income and savings credit

  1. Earned Income Tax Credit

  2. Saver's Credit

  3. Foreign Tax Credit

  4. Excess Social Security and RRTA Tax Withheld

  5. Credit for Tax on Undistributed Capital Gain

  6. Nonrefundable Credit for Prior Year Minimum Tax

  7. Credit to Holders of Tax Credit Bonds

Homeowner credits

  1. Mortgage Interest Credit

  2. Residential Energy Efficient Property Credit

  3. Nonbusiness Energy Property Credit

  4. Low-Income Housing Credit (for Owners)

  5. Frequently Asked Questions on Capital Gains, Losses, and Sale of Home

Healthcare credits

  1. Premium Tax Credit (Affordable Care Act)

  2. Health Coverage Tax Credit

Education Credits

  1. Lifetime Learning Credit

  2. American Opportunity Tax Credit

Phillip Ingelmo

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