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

Self-employed individuals should be aware of an important 2010 tax law change before they complete their 2010 federal income tax return. This tax change may be beneficial because it allows health insurance deductions to reduce Self Employment Tax.

Here’s what you need to know about the tax law change affecting the self-employed when you file your 2010 federal income tax return in 2011.

Health Insurance Deduction Reduces Self Employment Tax In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability. As in the past, eligible taxpayers claim this deduction on Form 1040 Line 29. But in 2010, eligible taxpayers can also enter this amount on Schedule SE Line 3, thus reducing net earnings from self-employment subject to the 15.3 percent social security self-employment tax.

Premiums paid for health insurance covering the taxpayer, spouse and dependents generally qualify for this deduction. Premiums paid for coverage of an adult child under age 27 at the end of the year, for the time period beginning on or after March 30, 2010, also qualify for this deduction, even if the child is not the taxpayer’s dependent.

As before, the insurance plan must be set up under the taxpayer’s business, and the taxpayer cannot be eligible to participate in an employer-sponsored health plan. Details, including a worksheet, are in the instructions to Form 1040.

For further information about this change or if you need answers to tax questions, visit the IRS website.

source: irs.gov

With the depressed economy and high unemployment, you can be sure taxpayers will want their tax refund as soon as possible. But where do you go to check the status of your income tax refund? The IRS webpage Where’s my refund is the place to check the status of your federal income tax refund.

Information about the status of your tax refund is generally available 72 hours after the IRS acknowledges receipt of your e-file return, or 3 – 4 weeks after mailing a paper return.

This tax help service requires you to provide the following information from your tax return:

• Your Social Security Number (or Individual Taxpayer Identification Number)
• Your Filing Status
• The exact whole dollar amount of your refund<

One very important note about getting the status of your income tax refund is that if you’re affected by recently reinstated tax breaks and you already filed your tax return, it will be processed beginning Monday, February 14, 2011. For more information regarding the delay in processing tax returns due to the tax law changes, check the IRS news bulletin at http://www.irs.gov/newsroom/article/0,,id=234736,00.html.

And always remember, the IRS never initiates email. So avoid the e-mail scams and offers of tax help by deleting them from your computer. The IRS will always contact you via U.S. mail.

For more tax help visit the IRS website.

The good news is, if you filed your income tax return using e-file, you will know the status of your tax refund in as little as 3 days.

source: irs.gov