You may be eligible for a few money making tax credits this tax year. A tax credit is a dollar-for-dollar reduction of taxes owed. It is even possible that you may receive a tax refund instead of owing taxes because some tax credit are refundable.

Here are four tax credits you should consider before filing your Federal Income Tax Return this year:

1. The Earned Income Tax Credit is a refundable credit for certain people who work and have earned income from wages, self-employment or farming. Income, age and the number of qualifying children determine the amount of the credit. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
3. The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
4. The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver’s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).

There are other money making tax credits available this tax year.  So before filing your income tax, check for credits you may be eligible for.

You can get more information about tax credits by visiting the IRS website or by calling 800-TAX-FORM (800-829-3676).

source: irs.gov

Raising children can be very hard on parents, and the bad economy conditions are making it even more difficult. A good tax tip for parents is to know that your children may help you qualify for some tax benefits.

Here are top tax tips that parents should consider when filing this year’s tax returns:

1. Dependents
   In most cases, a child can be claimed as a dependent in the year they were born. For more information and other tax tips pertaining to dependents see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
2. Child Tax Credit
   You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be get tax help in the form of an Additional Child Tax Credit.
3. Child and Dependent Care Credit
   Another great tax tip is that if you pay someone to care for your child (under age 13) while you work or look for work, you may be able to claim the Child and Dependent Care credit.
4. Earned Income Tax Credit
   The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
5. Adoption Credit
   You may get some tax help by taking a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included. For more information, see the instructions for IRS Form 8839, Qualified Adoption Expenses.
6. Children with Earned Income
   If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.
7. Children with Investment Income
   Under certain circumstances, a child’s investment income may be taxed at the parent’s tax rate. For more income tax help see IRS Publication 929, Tax Rules for Children and Dependents.
8. Higher Education Credits
   Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. For more tax tips see IRS Publication 970, Tax Benefits for Education.
9. Student loan Interest
   You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.
10. Self-employed health insurance deduction
    If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent. For more tax facts and tax tips see the IRS website.

Not all of the tax tips listed will increase your tax return but it will assure that you’re following IRS tax rules and regulations.

For more tax help, facts and information visit the IRS website

source: irs.gov

Our leaders in Washington are working hard on a tax relief compromise that will extend the Bush-era tax cut packages enacted in 2001 and 2003.

A summary of the Obama-GOP tax deal, released by the Senate, is now pending on the Senate floor. The tax cut compromise summary, obtained from the Senate Democrats website, calls for temporary tax relief in the following areas:

• Temporary Extension of Tax Relief
• Temporary Individual Alternative Minimum Tax (AMT) relief
• Temporary Estate Tax Relief
• Temporary Extension of Investment Incentives
• Temporary Extension of Unemployment Insurance
• Temporary Payroll Tax Holiday
• Temporary Extension of Certain Expiring Provisions

Here is the summary of the Obama-GOP tax cuts compromise:

Tax Cuts Compromise Package Summary
December 9, 2010

I. Temporary Extension of Tax Relief

Two major bills enacting tax cuts for individuals expire at the end of 2010: the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The following package extends these provisions from EGTRRA and JGTRRA for an additional two years, through 2012, and will provide important tax relief to American taxpayers. The following package also extends a number of provisions enacted as part of EGTRRA that were modified in the American Recovery and Reinvestment Act.

More on The Obama–GOP Tax Relief Compromise