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

The IRS offers 7 tax credits for taxpayers with disabilities. Parents of children with disabilities may also qualify for a number of tax credits and tax benefits.

The 7 tax credits for disabled taxpayers and taxpayers with disabled dependents are listed below:

1. Standard Deduction
   Taxpayers who are legally blind may be entitled to a higher standard deduction on their tax return.
2. Gross Income
   Certain disability-related payments, Veterans Administration disability benefits, and Supplemental Security Income are excluded from gross income.
3. Impairment-Related Work Expenses
   Employees who have a physical or mental disability limiting their employment may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.
4. Credit for the Elderly or Disabled
   This tax credit is generally available to certain taxpayers who are 65 and older as well as to certain disabled taxpayers who are younger than 65 and are retired on permanent and total disability.
5. Medical Expenses
   If you itemize your deductions using Form 1040, Schedule A, you may be able to deduct medical expenses. See IRS Publication 502, Medical and Dental Expenses.
6. Earned Income Tax Credit
   A great tax tip for the disabled is to consider the Earned Income Tax Credit. EITC is available to disabled taxpayers as well as to the parents of a child with a disability. If you retired on disability, taxable benefits you receive under your employer’s disability retirement plan are considered earned income until you reach minimum retirement age. The EITC is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund. Many working individuals with a disability who have no qualifying children, but are older than 25 and younger than 65 do — in fact — qualify for EITC. Additionally, if the taxpayer’s child is disabled, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for benefit programs such as Supplemental Security Income and Medicaid.
7. Child or Dependent Care Credit
   Taxpayers who pay someone to care for their dependent or spouse so they can work or look for work may be entitled to claim this credit. There is no age limit if the taxpayer’s spouse or dependent is unable to care for themselves.

For more information on tax tips, tax credits and benefits available to disabled taxpayers, see Publication 3966, Living and Working with Disabilities or Publication 907, Tax Highlights for Persons with Disabilities, available on the IRS website or by calling 800-TAX-FORM (800-829-3676).

source: irs.gov

With Congress back in session, Democratic and Republican congressional leaders will have to deal with the very important issues of the bush tax cuts and expiring tax credits.

Senator Dick Durbin of Illinois, the senate’s No. 2 Democrat, said negotiations over extending the Bush-era tax cuts also will include prolonging emergency unemployment benefits and other tax credits.

“I want to put a couple other things on the table,” Durbin said today on NBC’s “Meet the Press.” “We do have unemployment running out,” he said, and “I also want to make sure the earned-income tax credit, the childcare tax credit, and the ‘Making Work Pay’ tax credit are part” of the discussion.

The Bush tax cuts, passed in 2001 and 2003 are set to expire on Dec. 31, 2010. President Obama will meet with Congress on Nov 30 to discuss the agenda.

Besides discussion on extending the tax cuts, Congress must decide what to do about unemployment benefits set to expire at the end of the month. The Labor Department estimates that more than 2 million Americans will lose unemployment benefits if Congress does not act.

Arizona Senator Jon Kyl, the chamber’s second-ranking Republican, said there is “an opportunity for us to sit down and negotiate a resolution to this that’s good for the economy.” Kyl also repeated a key sticking point for Republicans: “We don’t believe taxes should be increased on anyone.”

The President has argued the country can’t afford indefinitely extending tax cuts for the wealthiest Americans, defined by the president as individuals making more than $200,000 and couples earning more than $250,000.

Obama on the Bush Tax Cuts

“I believe it is a mistake for us to borrow $700 billion to make tax cuts permanent for millionaires and billionaires,” Obama told reporters Nov. 14. “It won’t significantly boost the economy and it’s hugely expensive, so we can’t afford it.”

Republicans, who won a majority of House seats in the Nov. 2 elections and narrowed the Democratic margin in the Senate, are pushing to permanently extend all the current tax rates. While Obama has said he wants to permanently extend just the tax cuts on earnings up to $200,000 for individuals or $250,000 for households — about 97 percent of all taxpayers, according to the Internal Revenue Service — he has indicated he’s open to negotiations on achieving that goal.

“We should be focusing on what it takes to move this economy forward,” Durbin said. “We should not be worried about the discomfort of the wealthy.”

Expiring Legislation

Unless Congress acts, marginal rates will increase for all income-tax payers. Tax credits benefiting families will be cut in half. The so-called married penalty that forces some couples to pay more than if they were single will be reinstated. Rates will rise on most dividends and capital gains, and a levy on estates valued over $1 million will be resurrected.

“What’s likely to happen is there will be an extension of the tax cuts for everybody for a period of time,” Senator Byron Dorgan of North Dakota, a Democrat who is retiring, said in an interview today on CNN’s “State of the Union” program.

Extending only the current rates for individuals earning less than $200,000 and couples making under $250,000 would add more than $3 trillion to the national debt over the next decade. Sustaining tax cuts for those with higher incomes would add an additional $700 billion to the debt over the next decade, Treasury Secretary Timothy Geithner has said.

An across-the-board extension of all Bush-era tax policies would cost the government about $5 trillion in foregone revenue and interest cost on the debt, the Congressional Research Service estimated last month.

With the Republicans taking control of the House in January, President Obama may have no choice but to negotiate and give in to resolve these issues.

Source: businessweek.com