All Tax Credits You Can Get for 2018
Can you smell it in the air? It’s tax season now, and we’re all trying to get the best possible compensation. This means using tax deductions and credits to lower our bill. Read this post on the deductions you can make in 2018 and read the information on loans.
Tax incentives
Tax breaks trump deductions because they reduce the amount you pay dollar for dollar. So a $ 1,000 tax deduction equals $ 1,000 net of taxes, whereas a $ 1,000 deduction can lower your tax bill by several hundred dollars, depending on which tax category you are in. For example, if you pay a 25 percent marginal tax rate , you will save $ 250 minus $ 1,000.
There are two types of loans: refundable and non-refundable. Refunds are king because depending on the amount you can get a refund (the name really gives it). Non-performing loans will lower your score, but not less than $ 0.
Some of the most popular loans are:
- Earned Income Tax Credit: Earning an EITC is based on your income (obviously), enrollment status and number of children, and income limits change every year. It aims to help people with a modest income. For 2018, the limit is $ 15,270 if you are single with no children, $ 40,320 if you are single with one child, $ 45,802 if you are single with two children, and $ 49,194 if you are single with three or more children. If you are married and applying jointly, the limits are $ 20,950 without children, $ 46,010 with one child, $ 51,492 with two children, and $ 54,884 with three children. The loan is valuable: According to Motley Fool, it costs no more than $ 6,431 if you have three or more children (for a family without children, the maximum amount is $ 519). The IRS website has a lot of helpful information to find out if you are eligible and how much.
- Child Tax Credit : You can claim up to $ 2,000 for a dependent child under 17 at the end of 2018, depending on your income. Those with MAGI in excess of US $ 200,000 (single) or US $ 400,000 (joint marriage registration) are not eligible.
- Child and Dependent Care Loan : This loan can be applied for regardless of income, unlike many others (although it gets smaller as your income increases). To qualify for this loan, you need to pay someone else to care for your child (s) under 12, your spouse if they cannot take care of themselves, or another person who cannot take care of themselves but whom you you call a dependent. As TurboTax explains , there are other requirements and the amount of the loan depends on how much you pay for the treatment. You can ask for a percentage of up to $ 3,000 spent on caring for one dependent, or $ 6,000 for a higher percentage. (The higher your income, as noted above, the lower the percentage you can claim.)
- Savings Loan : This is a bad loan designed to encourage low-income workers to save savings for retirement. If you contribute to a 401 (k) or IRA, you already receive a tax credit, but that credit is an additional $ 2,000 to $ 4,000 if you qualify. The loan amount depends on your income and enrollment status, but, for example, if you are single and earn less than $ 19,000, you can get a loan equal to 50 percent of your contributions to your retirement plan. Details here . You are requesting this tax credit on Form 8880 in addition to Form 1040.
- American Opportunity Credit : If you are attending college at least part-time and earn less than $ 80,000 ($ 160,000 for married couples), you may qualify for a loan “equal to 100 percent of the first $ 2,000 for eligible educational expenses and 25%. of the next $ 2,000, with a maximum tax credit of $ 2,500, ” said Motley Fool . Qualifying costs include things like tuition, books, etc. There are some other requirements that you must meet that you can read about here .
- Lifetime Study Loan : This loan is more flexible than the American Opportunity Loan, but costs less overall. You can take it if you take any post-secondary education course. “If you take one course at community college ‘just because’ you can qualify for a lifetime tuition credit,” notes Motley Fool. The income limit for a full loan, which is 20 percent of eligible costs, up to $ 10,000 is $ 55,000 if you are applying for a bachelor and $ 110,000 for married couples who are joint.
Over the next few months, we will have a variety of tax information to bring you up to speed on the new changes this year. If you have a specific tax related question, please email me at alicia.adamczyk@lifehacker.com .