Tax Credits For Families
 By Terry M. Blair

Want to save every penny you can on your family’s tax bill? Then pay attention to the tax credits offered by Uncle Sam.

You may not be eligible for all the credits. But, if you can take advantage of just a few, you could lower your tax bill on April 15. Remember to consult your tax professional to find out if you qualify for any of these or other tax credits.

Homebuyer Credit
Taxpayers who bought a home for the first time in 2009 may qualify for a tax credit of up to $8,000, or $4,000 for married filing separately.

To claim the credit, you’ll need to file Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. You’ll also be required to file a paper tax return because of the added documentation requirements, such as a settlement statement from the purchase of your home.

To get more information about the First-Time Homebuyer Credit, visit the IRS Web site at www.irs.gov.

Child Tax Credit
You may be able to take this credit for each of your children under age 17.

If you don’t benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. This additional credit could give you a refund even if you don’t owe any federal income tax.

For more information see IRS Publication 972, Child Tax Credit.

Child and Dependent Care Credit
You may be able to claim this credit if you pay someone to care for your child under age 13 so that you can work or look for work.

For more information see IRS Publication 503, Child and Dependent Care Expenses.

Earned Income Tax Credit
This credit is a benefit for certain people who work and have earned income from wages, self-employment or farming. The credit reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.

Adoption Credit
You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.

Higher Education Credits
The American Opportunity Credit can be claimed for tuition and certain fees paid for higher education in 2009 and 2010. It’s worth up to $2,500, and even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.

To be eligible for the full credit, your modified adjusted gross income must be $80,000 or less; $160,000 or less for joint filers.

To see if you meet the eligibility requirements for the credit, see IRS Publication 970.

Home Energy Efficiency Improvement Tax Credits
If you made energy efficient upgrades to your home in 2009, you may be eligible for a credit equal to 30 percent of the cost of these upgrades (up to $1,500).

Heat and air conditioning systems, insulation, windows and other upgrades qualify. For more details on the credits, visit www.energy.gov/taxbreaks.htm.

AFS Can Help
Got questions about whether you qualify for these or other tax credits? Get answers from the online certified public accountants at ProTax. ProTax offers complete and confidential answers to your questions within two business days—and it’s included in the cost of your AFS Membership!


(Posted March 2010)

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