With tax season fast approaching, the Internal Revenue Service encourages taxpayers to take time now to determine if they are eligible for tax credits important.
By Alejandra Castro/IRS
This is the second in a series of reminders to help taxpayers prepare for the upcoming filing season. The IRS recently updated its special page Take Action Now for Tax Season of 2020.
Earned Income Tax Credit
El Earned Income Tax Credit (EITC) is a refundable federal tax credit for working people with low or moderate income who meet certain eligibility requirements. Because it is a refundable credit, those who qualify and claim the EITC pay less federal taxes, pay no taxes, or may even get a tax refund. The EITC can mean a credit of up to $6,557 for working families with three or more qualifying children. Workers without qualifying children may be eligible for a credit of up to $529.
To get the credit, people must have earned income and file a federal income tax return, even if they don't owe any tax or aren't required to file.
Taxpayers can use the EITC Assistant to see if they are eligible for the EITC, determine if your child or children qualify for the credit, and estimate the amount of the credit you may receive.
Child Tax Credit
Taxpayers can claim the Child Tax Credit if they have a child under the age of 17 and meet other requirements. The maximum amount per qualifying child is $2,000. Up to $1,400 of that amount may be reimbursable for each qualifying child. So, like the EITC, the Child Tax Credit can give a taxpayer a refund even if they don't owe taxes.
The qualifying child must have a valid Social Security number issued before the due date of the tax return, including extensions. For tax year 2019, this means April 15, 2020, or if a taxpayer gets a tax filing extension, October 15, 2020.
The income limit at which the Child Tax Credit begins to phase out has been increased to $200,000, or $400,000 for married filing jointly.
Credit for Other Dependents
This credit is available to taxpayers with dependents for whom they cannot claim the Child Tax Credit. These include dependent children who are 17 years of age or older at the end of 2019 or parents or other qualified persons supported by the taxpayer.
La Publication 972, Child Tax Credit, available now on IRS.gov, has more details and will be updated for tax year 2019 soon.
Education Tax Credits
There are two education credits that can help taxpayers paying higher education costs for themselves, a spouse, or a dependent. The American Opportunity Tax Credit (AOTC) and the Perpetual Learning Credit (LLC) are claimed in the Form 8863, Education Credits. The AOTC is partially refundable.
To obtain any of the credits, the taxpayer or student generally must receive Form 1098-T, Declaration of Enrollment, from the school attended. Some exceptions apply. See the Form 8863 instructions for more information.
Interactive Tax Assistant
The IRS encourages taxpayers to use the Interactive Tax Assistant (ITA) from the agency to help determine if they can claim any of these credits. The ITA also provides answers to general questions about filing status, dependent claim, filing requirements, and other topics.
Start with IRS.gov for help including tools, filing options, and other services and resources. Taxpayers are increasingly visiting IRS.gov as their first resource for tax matters. Information in languages other than English is available on the Languages tab of IRS.gov.
La electronic filing It's the easy, secure, and most accurate way to file taxes. There are a variety of free electronic filing options for most taxpayers, including the use of Free file from the IRS for taxpayers with income less than $66,000, or the IRS Interactive Forms for taxpayers who earn more. Taxpayers who typically earn $56,000 or less can have their tax returns prepared at a Voluntary Taxpayer Assistance (VITA). The sites of Tax Advice for the Elderly (TCE) offers free tax help for all taxpayers, particularly those who are 60 years of age or older.
The page Let us help you on IRS.gov includes links that take users to information and resources on a wide range of topics.