There are several tax credits available to individuals and small businesses. Tax credits reduce your actual tax dollar for dollar, unlike tax deductions which reduce your taxable income. The terms and conditions for tax credits change every tax year, but we’ve listed a few of the more common credits below.
The Alternative Minimum Tax Credit is the result of incurring an AMT in a prior year, generating a credit that can be used to offset the excess of the taxpayer’s regular tax over the AMT Tax in a subsequent year.
Adoptive parents may claim a tax credit for the qualified expenses of adopting a child.
Child and Dependent Care Credit
This credit may be used by those caring for a child, disabled child, spouse, or other dependent while seeking work or working.
Child Tax Credit
Taxpayers who have a qualified child may use this credit.
Earned Income Credit
A credit for taxpayers who work but fall into a low-income category.
Home Energy Credit
A variety of credits are available to homeowners who make improvements to their residence which make it more energy-efficient.
Making Word Pay Credit
This is a refundable credit on earned income.
This credit is available for retirement plan contributions made by eligible, low income taxpayers to IRAs and qualified elective income deferral arrangements.
Work Opportunity Credit
This credit is available on an elective basis for employers hiring individuals from one or more specified targeted groups.