Tax Season is in full swing and the deadline of April 18th to file your 2016 tax return is quickly approaching! While taxpayers often think about what the IRS is trying to take from them, they don’t often think about the fact that the IRS offers many deductions that make a great deal of money available to the taxpayer. Tax benefits are defined as acceptable deductions or credits on a tax return intended to reduce a taxpayer’s burden. These advantages usually support certain types of ventures such as going to college, buying a home, or starting a business.
American Opportunity Tax Credit
If you are in school, two of the biggest credits you may be eligible for are the Lifetime Learning Credit and the American Opportunity Tax Credit. The American Opportunity Tax Credit (AOTC) is a credit for eligible educational expenses during the first four years of your higher education. You can get a maximum of $2,500 credit per year per qualified student. You can also get up to $1,000 refunded if the credit covers all your expenses!
Lifetime Learning Credit
Next, is the Lifetime Learning Credit. This credit includes tuition and related fees at a qualifying educational institution. This credit is different from the American Opportunity Tax Credit in that it can help pay for undergraduate, graduate and professional degree courses–this includes courses that help you gain skills for your career. There is no limit on the number of years you can claim the credit, and it is worth up to $2,000 per tax return.
Earned Income Tax Credit
Not in school? That doesn’t mean you’ll miss out on the benefits. Consider the Earned Income Tax Credit, there are millions of people who qualify for this credit, but those who will get the largest refunds will be workers, those who are self-employed, or farmers, who earned $53,505 or less last year, and have three or more qualifying children. If this sounds like you, you could earn up to $6,269. Don’t have kids? Those without children still saw up to $506 added to their tax refund. This is a unique credit because it is refundable, meaning those eligible may get a refund from the IRS even if they owed no tax.
Mortgage Interest Deduction
Finally, your home can give you money back when it comes to tax time. There are numerous deductions and credits for homeowners an example of one of them is the Mortgage Interest Deduction. The Mortgage Interest Deduction is the biggest home-related tax deduction that is available to homeowners unless you purchased your home in the 2016 tax year. With the Mortgage Interest Deduction, you can deduct your interest payments on either your primary or secondary residences, up to the limit of $1 million in total mortgage debt if married and filing jointly. If you are a single filer or a married couple filing separately the limit is up to $500,000.
There are many more credits and deductions available for both individuals and businesses. If you think you qualify for any of these deductions or any others, please contact us at Tax Pros Plus. We will see if you are entitled and work with you to get the most out of your tax return.