HOW TO How to Claim Tax Credits
Copyright ByDave Ward, Bukisa and eHow Member
Broke? Claim Tax Credits!
Claiming tax credits is one of the easiest ways to make money imaginable. If I told you I would pay you $1000 to fill out one paper form would you take the time to do it? Of course you would. That is what tax credits are. They are money in your pocket. Here are some of the credits you may be eligible to claim: child tax credit, first time home buyer tax credit, earned income tax credit, renewable energy tax credit, home renovation tax credit, or the new car tax credit. In some cases you get paid for tax credits even if you do not owe any taxes! This is your own personal federal bail out plan. Read on to find out how to claim the tax credit the government says is lawfully yours to receive.
Find Your Tax Credit
DETERMINE WHICH TAX CREDITS YOU MIGHT BE ELIGIBLE FOR.
Tax problems can go away with a few tax credits. Turbotax software will simply ask you a list of questions that determine your eligibility for these tax credits. There is a free version of Turbotax available based on your income. If you don’t qualify for free Turbotax software the basic plan is relatively inexpensive.
Even if you choose to do your taxes the old paper and pen way, there are some questions which will help you know where to look for tax credits.
- 1. Did you buy a new home within this tax year? Was this your first home purchase? If not, has it been three years or more since you last owned a home? Consider the first time home buyer tax credit.
- 2. Do you have children who live with you? Do you have more than one child? Is your income relatively low? You may qualify for the child tax credit or the additional child tax credit. (1040 lines 52 and 66)
- 3. Is your adjusted gross income (Form 1040 Line 39) relatively low? You will want to calculate your Earned Income Tax Credit especially if you have children (line 64a).
- 4. Have you installed forms of renewable energy such as solar or wind generated power? You may be able to claim credit on your tax forms in states such as New Mexico or North Carolina.
- 5. Are you currently paying for education? Then you may qualify for the Hope Credit or the Lifetime Learning Credit (Form 8863 Line 50).
These are just a few of the possible tax credits you can claim. If you do not receive tax help, carefully review the second page (back page) of form 1040 for possible credits you can claim.
Tax Credit Forms
FILL OUT THE APPROPRIATE FORMS AND SCHEDULES FOR THE TAX CREDIT
Some credits require additional forms or schedules. If asked, be sure to attach the appropriate form to your tax return to ensure you receive your credit and avoid an audit. Carefully calculate the math if you are not using tax help software or the services of a CPA.
Don’t let these forms intimidate you. They aren’t as difficult as they might seem. Just follow each one step by step and look up any questions on line.
DOUBLE CHECK YOUR TAX CREDIT CONCLUSIONS WITH THE IRS WEBSITE
http://www.irs.gov is a wonderful resource for tax questions and your first stop. Type in the number of your form or schedule and pull up its instructions. Read each line and attempt to understand the basic gist of the tax credit.
RECOGNIZE THAT YOU CAN GET PAID EVEN IF YOU HAVE ZERO TAX OBLIGATIONS
Many people with extremely low incomes (students for example) may neglect to file taxes simply because they are confident they have no obligations. The government may have decided it has an obligation to you! So check to see if you can claim the kind of tax credits that send you an extra pay check. Don’t worry, you will pay this debt back over many years of productive contributions in the American workforce paying the full tax debt of a solid income.
If income tax law says you have the right to claim a tax credit, then claim it.
Tips & Warnings
- Strongly consider getting tax advice or help unless you are willing to take the time to understand the system.
- Be careful with your numbers and math. Double check your conclusions to avoid a tax audit.